Ecuadoran President Rafael Correa on Saturday said that he hopes OPEC countries will reach an agreement to stabilize the oil market at the upcoming meeting in Algeria, warning of “serious risks” for the group if they do reach a deal.
OPEC members are to hold an informal meeting in Algeria from today to Wednesday.
“It is a meeting being held for other reasons, but all the OPEC members will be there, so we hope to have other informal meetings and reach agreements to stabilize the oil market,” Correa said in his weekly televised broadcast.
“Otherwise the consequences could be very serious, it could lead to a disintegration of OPEC itself... There is even a risk that internal disputes within OPEC could lead prices to plummet again,” he said.
Ecuador supports the position of ideological ally Venezuela that major oil producers should freeze production levels to limit excess supply and support prices.
The idea has received some support among oil producers, but oil prices slumped on Friday on signs that OPEC members Saudi Arabia and Iran were struggling to reach a preliminary consensus in the run-up to the Algeria talks.
A previous bid to freeze output, led by Saudi Arabia, fell apart in Doha in April when Iran refused to play ball, arguing it needed to bring its production back up to pre-Western sanctions levels.
“An agreement on a production freeze accepted by everyone would be a surprise,” said Didier Houssin, head of research group IFPEN.
“Analysts expect more a comment that’s a bit calming on the need to continue to follow the market ... and to stabilize production. Without binding measures, without specific quotas,” Houssin said.
The OPEC talks are to take place on the sidelines of a three-day International Energy Forum gathering — in which Russia will participate — from today.
So far the two major producers have not taken any action to reduce the oversupply, which has resulted from a boom in US fracking and from OPEC’s nearly two-year-old strategy to throw open the spigots to defend market share.
OPEC secretary-general Mohammed Barkindo of Nigeria, has himself dampened expectations, describing the meeting as consultative, while Algerian Minister of Energy Noureddine Boutarfa has notably said OPEC could call a special decisionmaking meeting in Algiers.
Oil prices have plunged from peaks of more than US$100 a barrel in the middle of 2014 to near 13-year lows below US$30 in January. Prices have strengthened since lows at the start of the year and currently stand at about US$45 a barrel, within striking distance of the US$50 to US$60 range desired by some OPEC members.
Additional reporting by AFP
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