Before meetings of the International Energy Forum and OPEC in Algeria during the period from 26 to 28 of the current September which will discuss the situation of the oil market, producing countries are seeking to reach an agreement to balance the prices and try to ease the pressure on countries affected by this decline, due to falling prices and a glut of large oil supply.
On the fifth of the current September , a joint Saudi –Russian statement was issued on the sidelines of the summit of Group of Twenty, held in the city of Khanijo saying that they had agreed to form a working group to review the factors affecting the market forces and come up with recommendations to contribute to ensuring stability in oil markets .
Saudi Oil Minister Khalid al-Falih in a press conference with his Russian counterpart Alexander Novak said that Iran was excluded from the agreement even though it is a member of OPEC, due to the recent increase of oil productions rates after the lifting of international sanctions on its economy.
It is likely that the last Saudi-Russian agreement to break the state of stagnation of the market and push oil prices to rise, and may be an opportunity, in the absence of objection barriers, to address the economic difficulties experienced by the producing countries due to the drop in oil prices.
But many experts see that this agreement is a special agreement between the two giants of world oil, which is the establishment of a phase of cooperation in the oil markets and the end of the competition, it may be the establishment of a joint understandings with the producers in OPEC about the price stability in the future.
The meeting Algeria comes in the wake of the Russian and Saudi agreement on the sidelines of the summit of Group of Twenty nations last week in China on cooperation in the field of oil, and establishment of “working group” for the establishment of a stabilization in the market, a move seen by analysts is another indicator of severe economic pressure suffered by oil producers, according to a report published by “Business Insider”.
According to analysts, the agreement has resulted that Iran in the following day of the summit, to present some support to freeze oil production. However, they see that there are many reasons to make Saudi Arabia to refuse any concrete agreement.
It is obvious to observers that the pressures that cast a shadow over the economies of producing countries pay them to work towards stability and freeze the production ceiling, and perhaps the most countries that were hit and affected by the drop of prices are Venezuela, Algeria, Iraq and others , even those countries of its huge economies can not hide the pressures facing their economies, and today, it desperately needs to be to price stability and the balance of the market.
As mentioned in previous articles, there are many factors that have served as an obstacle to any agreement on the oil markets, especially the continuing tensions in the bilateral relations with Iran, the latter opposes any agreement on freezing the production ceiling, and it has contributed to the failure of many of the previous meetings , but apparently , the market share is a pretext to abort any project sponsored by Saudi Arabia, which has always required for the conclusion of any agreement that Iran be a partner and is committed to this agreement, but the political factor was always present that most of the interactions in this file were based on geopolitical tensions of the two countries.
Director of International Affairs, National Iranian Oil Company run by the government Mohsen Qmasri said last week that Iran might be willing to take a decision on a production ceiling after its production has reached to the levels before the sanctions, surpassing the 3.8 million barrels a day as confirmed by Western media reports.
With respect about supply , the International Energy Agency noted in its monthly report issued last week to the likelihood of continued surplus in international oil markets for a longer period than they expect to continue until before the second half of next year.
During the few days separating us from the Algerian meeting, we may witness the developments in the positions of countries, however, it will witness meeting of fourteen producers of OBEC in Algeria, and more than seventy of oil producing and consuming country in order to discuss the developments of the Russian Saudi agreement and its impact on the global market, and probably the next meeting of Algeria will not have an obvious effect on the oil markets, especially in the absence of states agreement to reduce production, but the meeting may be part of the series of meetings that are going toward restoring the balance of the oil markets in the future .
Amer Al-Omran
Translated by : Mudhaffar Alkusairi
Rawabet Center for Research and Strategic Studies