Opec al-Badri: Producers could take further action

OREANDA-NEWS. February 24, 2016. Opec and non-Opec producers could take additional coordinated action to curtail output if a recent agreement does not bear fruit, Opec secretary-general Abdullah al-Badri said today.

Russia, Saudi Arabia, Qatar and Venezuela on 16 February agreed to freeze output at January levels, if other producers join the initiative. But Iran and Iraq are reluctant to make similar commitments.

The freeze agreement is a "first step, to see what we can achieve. And if we are successful, [we can see] what else we can achieve," Opec secretary-general Abdullah al-Badri said at the IHS CeraWeek conference in Houston. It will take three to four months to verify if the agreement has yielded results, he said.

The agreement follows discussions Opec members started with non-Opec members in 2015, he said. "We talked to non-Opec, Mexico, Russia, Brazil, Oman and others."

There is no need to convene a special meeting of Opec to discuss the freeze agreement since it can be discussed at the 5 June Opec meeting, al-Badri said.

IEA executive director Fatih Birol said the freeze agreement would have a limited effect but noted that Russia is slated to cut production in any case.

"I look at the result. Whether it is a freeze or a decline, it is the same for the market," al-Badri said.

The crude price inevitably will rise as a result of the deep cut in investment in oil production capacity, al-Badri said. But he acknowledged that US shale and other tight oil production will limit upward movements in oil prices.

"With shale, I do not know how we will live together. Shale will come back with any price increase," al-Badri said.