{"id":7005,"date":"2016-09-27T00:10:26","date_gmt":"2016-09-27T05:10:26","guid":{"rendered":"http:\/\/nrgibroker.com\/?p=7005"},"modified":"2016-09-27T00:10:26","modified_gmt":"2016-09-27T05:10:26","slug":"what-does-opecs-freeze-talk-really-mean","status":"publish","type":"post","link":"https:\/\/nrgibroker.com\/en\/what-does-opecs-freeze-talk-really-mean\/","title":{"rendered":"What Does OPEC’s Freeze Talk Really Mean?"},"content":{"rendered":"

Heading into the home stretch before a highly anticipated OPEC meeting in Algiers next week, crude industry experts and non-OPEC members alike are opining on what may happen to crude production.<\/span><\/h2>\n

Dave Pursell, managing director and head of macro research at Tudor, Pickering, Holt & Co. in Houston, told Rigzone the production freeze idea is based largely on optics.<\/span><\/h2>\n

\u201cBut, they\u2019re raising expectations that there will be an agreement,\u201d he said. \u201cI think they need to do something, and the challenges are less now than they were earlier this year.\u201d<\/span><\/h2>\n

Oil prices have tumbled from more than $100 per barrel in 2014, as prodigious supply outsized demand. More recently, crude prices have hovered in the low $40s.<\/span><\/h2>\n

As Pursell explained, OPEC members Iraq and Libya can\u2019t produce more oil, anyway, at least in the near term. Iraq needs significant capital investment to move forward, and Libyan production is struggling under the weight of political unrest.<\/span><\/h2>\n

\u201cThe reality is the only reason you can get a freeze is because people can\u2019t grow. The only spare capacity in the world sits inside of Saudi Arabia and Libya. That doesn\u2019t mean Iran and Iraq can\u2019t grow over time, and the rest of OPEC can\u2019t grow a little bit over time, but it takes a ton of capital,\u201d he said. \u201cThere\u2019s no spare capacity that could easily be brought on.\u201d<\/span><\/h2>\n

Still, Pursell said that even if a production freeze agreement is mostly for show, it\u2019s not meaningless.<\/span><\/h2>\n

\u201cBut it\u2019s important \u2018show\u2019 in that shows they can agree to something. There\u2019s this notion that OPEC is irrelevant and my argument is that if OPEC is irrelevant, how come I\u2019m talking about them every day? And so if they\u2019re going to eventually have to cut \u2013 which we don\u2019t think they will \u2013 but if they do, you first have to have an agreement to not increase,\u201d he said. \u201cYou have to agree on something, and then if you have to make a harder choice down the road that you have to cut, there\u2019s more confidence that it could actually be implemented.\u201d<\/span><\/h2>\n

Many analysts, including Pursell, have said a cut is unlikely, though. Russia recently said it\u2019s off the table. The nation\u2019s energy minister told UPI there are no proposals to slash crude production. Alexander Novak said one option under review would be to maintain production rates at current levels for the up to six months.<\/span><\/h2>\n

According to a new Reuters\u2019 story anonymous sources have said Saudi Arabia would be willing to cut its crude production if Iran will cap its oil output. Iran has steadfastly said it won\u2019t consider a freeze until it has ramped production back up to pre-sanction levels, but that may soon happen.<\/span><\/h2>\n

\"\"<\/a><\/h2>\n

Copyright: Rig Zone<\/a><\/span><\/h2>\n","protected":false},"excerpt":{"rendered":"

Heading into the home stretch before a highly anticipated OPEC meeting in Algiers next week, crude industry experts and non-OPEC members alike are opining on what may happen to crude production. Dave Pursell, managing director and head of macro research at Tudor, Pickering, Holt & Co. in Houston, told Rigzone the production freeze idea is […]<\/p>\n","protected":false},"author":1,"featured_media":7007,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1017],"tags":[847,854,1076,208,300,1075],"class_list":["post-7005","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-alexander-novak","tag-crude","tag-crude-production","tag-oil","tag-opec","tag-upi"],"_links":{"self":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts\/7005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/comments?post=7005"}],"version-history":[{"count":0,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts\/7005\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/media\/7007"}],"wp:attachment":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/media?parent=7005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/categories?post=7005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/tags?post=7005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}