The 168th OPEC meeting will be held in the Austrian capital Vienna today.
At its last meeting in June, OPEC made a historic decision to maintain oil production levels (30 million barrels per day) despite a slump in global oil prices.
Saudi Arabia has come under increased pressure from fellow OPEC members to cut output to prop up prices. Thus, Iran has demanded to reduce their output collectively by 1.3 million barrels per day. In addition, Tehran intends to increase it's oil export levels to where it was before the sanctions and has repeatedly said that it is ready to increase oil exports to at least 1 million barrels per day five months after sanctions are lifted.
The President of Venezuela Nicolas Maduro, in his turn, said that Venezuela seeks to reduce oil production by 5% to strengthen prices.
In addition, the OPEC countries will consider Indonesia's request to reactivate its membership of the organization. Indonesia suspended its membership from January 1, 2009 due to a sharp decline in oil production.
Sberbank CIB analyst Valery Nesterov said in an interview with a correspondent of Vestnik Kavkaza that Saudi Arabia won't reduce oil quotas, despite the pressure from Iran and Venezuela. He pointed out that Riyadh has serious and successful experience of the struggle for markets in Europe and Asia. "Saudi Arabia has large foreign exchange reserves, which allow it to have a particular loan limit, giving the opportunity to cover a significant budget deficits – its budget was based on a price of about $80 per barrel," he said.
"Therefore, now it is important for Saudi Arabia to show its power. The United States's production of shale oil has declined significantly, possibly by $50 billion for the year," the analyst added.
Nesterov noted that the current situation does not suit the rest of the OPEC countries, but it is unlikely that they will influence the situation. "But it does not mean that this situation will last for a very long time," the expert stressed.
"We will hope that the market will gradually catch up in the second half of 2016, especially since a slight increase in prices, possibly to $60, is expected at the end of 2016," Nesterov said.
Regarding the situation with Iran, which is returning to the oil market, the Sberbank CIB analyst said that Tehran will produce and sell oil without coordinating its actions with OPEC. He added that, even if OPEC will reduce oil production levels, it will be insignificant, about $1.2 billion, so the market will not even notice it. The decline in oil production levels may have a positive impact on each country. "Unfortunately, OPEC is no longer an organization which influences the real situation in the world market. The United States is becoming the main player in terms of oil supply," Valery Nesterov concluded.
