(Bloomberg) -- A meeting between officials from OPEC and oil producers outside the group including Russia did not discuss restrictions on crude output or setting a target range for prices, said a Russian official that attended the gathering.
Russia is likely to meet again with the Organization of Petroleum Exporting Countries in December, Ilya Galkin, the Russian Energy Ministry’s head of international relations, told reporters after the technical talks in Vienna. Venezuela has proposed a summit between heads of state from OPEC and other oil-producing nations in November to discuss the price needed to sustain future supplies, the country’s oil minister Eulogio del Pino said.
Venezuela, whose economy is reeling after a 40 percent slump in oil prices over the past year, has long urged fellow OPEC members to curb production and support prices. Saudi Arabia led the 12-member group to switch its strategy in November 2014 to focus on battering competitors including US shale producers and reclaiming market share.
Russian oil production rose to a post-Soviet record this year while OPEC has exceeded its 30 million-barrel daily production target for more than a year. Russia is the largest producer outside the group with an output of 10.74 million barrels a day in September, according to government data.
An “equilibrium” oil price of about $88 a barrel is necessary to ensure that enough new supplies are developed to offset an annual decline in global production of about 10 percent, Venezuela’s del Pino said. “There will be another cycle of high prices” if there isn’t enough investment, he said.
More technical meetings will be necessary to clarify further the Venezuelan proposal before a summit of heads state from nations within OPEC and other exporting states can be held, Galkin said. “We need two, maybe three technical preparatory meetings to study the proposal more in detail and depth,” he said.
Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman and Russia were invited to meeting of technical experts at OPEC secretariat in Vienna, a person with direct knowledge of the matter said Oct. 14. Norway and Azerbaijan confirmed they wouldn’t attend the gathering.
The “equilibrium price” suggested by Venezuela would be a “moving target” that would vary with time according to investments required to sustain production, Del Pino said. The purpose of the OPEC-non-OPEC summit will be to create “a committee that would define what is the equilibrium price,” he said.
The proposal comes after the failure of repeated efforts by OPEC members including Venezuela and Algeria to broker an agreement between the group and other producers to reduce oil supply in order to boost prices. Global oil markets will remain oversupplied next year as demand growth slows and Iranian exports are poised to recover with the lifting of sanctions, the International Energy Agency said last week.
OPEC’s plan to choke off supply growth outside the group does appear to be working. U.S. crude production has retreated about 500,000 barrels a day from the three-decade peak reached in June to 9.1 million a day in the week to Oct. 9, according to data from the Energy Information Administration. OPEC ministers are due to review policy on Dec. 4 in Vienna.
To contact the reporters on this story: Maher Chmaytelli in Paris at firstname.lastname@example.org; Dina Khrennikova in Moscow at email@example.com To contact the editors responsible for this story: James Herron at firstname.lastname@example.org Raj Rajendran.
Copyright 2017 Bloomberg News.
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