Venezuela says meeting Saudi, Russia ahead of OPEC talks

Oil market watchers are divided on the outcome of OPEC's meeting in the Austrian capital. Predictions range from a large production cut to revive prices, to a small reduction, or none at all

Venezuela says meeting Saudi, Russia ahead of OPEC talks

World Bulletin/News Desk

Venezuela will discuss oil-market "coordination" with OPEC heavyweight Saudi Arabia and major oil producers from outside the group, Foreign Minister Rafael Ramirez said on Tuesday, as the Latin American country tries to rally support for action to boost prices.

Riyadh has kept the market guessing about its response to crude's near 30 percent drop since June, but ahead of OPEC's output meeting on Thursday has shown willingness to talk with other members and rival producers, including Russia and Mexico.

"We are going to discuss the market situation and some coordination," Ramirez told reporters in Vienna.

"The most important thing is we are talking," Ramirez, who until recently was oil minister and president of state oil company PDVSA, added.

Igor Sechin, the head of Russian state oil company Rosneft and a close ally of President Vladimir Putin, arrived in Vienna on Tuesday amid hints that Moscow could cut output or exports if the producer group does the same.

Pedro Joaquin Coldwell, the energy minister of fellow non-OPEC member Mexico, was seen heading into the same hotel as Sechin.

Oil market watchers are divided on the outcome of OPEC's meeting in the Austrian capital. Predictions range from a large production cut to revive prices, to a small reduction, or none at all.

Current prices are far below what most OPEC members and rival producers such as Russia need to balance their budgets, but the group has struggled to adapt to growing supplies from the U.S. shale boom that have hammered prices to four-year lows below $80 a barrel.

Some analysts say an OPEC cut of as much as 1.5 million barrels per day (bpd) is needed to support oil prices and avoid increasing a supply glut in the first half of 2015.

Algerian Energy Minister Youcef Yousfi told the official APS news agency on Tuesday that OPEC would seek a "consensual step" to try to bring stability to the oil market, without giving further details.

Diplomatic and market sources say Saudi officials told briefings in recent months that the kingdom, with its large currency reserves, was prepared to withstand oil prices as low as $70-$80 per barrel for up to a year.

When Saudi Oil Minister Ali al-Naimi spoke earlier this month after weeks of silence, he said Riyadh's desire for stable markets had not changed but gave no clue about his potential response.

"Although the objectives of the cartel are unclear today, what is apparent is that investors and companies are being shocked out of the $100 per barrel oil comfort range of the last four years and that volatility looks set to remain a feature in 2015," analysts from Barclays wrote on Tuesday.


In Vienna on Monday and Tuesday, Naimi brushed off reporters' questions about oil prices and surplus supplies. "This is not the first time the market is oversupplied," he said.

The fact that Naimi arrived three days before Thursday's meeting may indicate he is gearing up for long talks with fellow ministers and possibly Sechin, who has been targeted by U.S. sanctions over Russia's actions in Ukraine.

The delegations of Venezuela and Iran, usually seen as price hawks, have asked to meet Naimi on Tuesday, an OPEC source said.

Russia's Kommersant newspaper cited sources on Monday as saying Russia might suggest cutting its oil production by around 300,000 bpd from next year and that Moscow expected OPEC to limit its output by another 1.4 million bpd.

If Russia were to agree to cut production, it would effectively side with OPEC hawks, which have been putting pressure on Saudi Arabia to reduce supplies.

Moscow's relations with OPEC were soured by the country's pledge to cut output in tandem with the group in the early 2000s -- Russia failed to follow through, and raised exports instead.

Analysts are sceptical Moscow can offer anything significant this time.

"Russia's overtures to OPEC ... are not particularly credible," analysts from Commerzbank said, adding that Western sanctions on Russia made it difficult for the country to increase output anyway.

Iranian news agency Shana said Putin and Iranian President Hassan Rouhani spoke by telephone on Monday evening and agreed "on necessary cooperation in favour of oil markets".

The agency did not say where it acquired the information. On Monday, the Kremlin said the presidents discussed Iranian nuclear talks and bilateral issues and made no mention of oil.

On Monday, Iran and six world powers agreed to yet another extension in the talks aimed at resolving a 12-year-old dispute over Tehran's nuclear programme until June 30, 2015.

That made very unlikely any quick revival in Iran's oil exports and removed a potential layer of complication to this week's OPEC meeting.

Güncelleme Tarihi: 25 Kasım 2014, 16:33