Oil prices dip under $18 per barrel
Oil prices dip under $18 per barrel
Reuters, London
Oil prices were hovering around two-year lows on Thursday
after OPEC raised the stakes in a game of high risk poker with
rival oil producers.
In the opening salvo of what industry analysts said could turn
into an ugly oil price war OPEC ministers agreed to cut out put
by 1.5 million barrels per day.
But they said they would defer implementing the lower limits
until Jan. 1 "subject to a firm commitment from non-OPEC oil
producers to cut their production by a volume of 500,000 bpd
simultaneously".
"We are trying to give them a generous offer and if I were in
their shoes I would take this offer," said Qatari Oil Minister
Abdullah al-Attiyah.
Brent crude futures were down 25 cents at US$18.50 a barrel at
1043 GMT (5.43 p.m. Jakarta time) having dipped below $18 a few
minutes after trading began.
"This is an offer or perhaps even a threat. It doesn't really
feel like an OPEC agreement because it depends on countries
outside of the cartel," said Glen Murray of oil brokers Azure in
France.
"It seems to be a matter of who blinks first".
"This appears to be a big bet that non-OPEC will come to the
party and cut production rather than face their revenues being
crushed by falling prices," said Simon Games-Thomas at NM
Rothschild & Sons in Sydney.
Analysts say the declining trend in the oil price could make
Indonesia unable to meet its oil revenue target this year and
next year. Indonesia has targeted Rp 100 trillion (US$9.4
billion) in oil and gas revenue this year and Rp 66.1 trillion
next year with the oil price assumption of $24 per barrel this
year and $22 per barrel next year.
OPEC wants to curb world supplies to lift prices back into a
$22 to $28 a barrel band, but has become increasingly frustrated
with the lack of backing from non-cartel producers after it made
three output cuts this year totaling 3.5 million bpd.
It says non-members, which have been increasing output, should
shoulder some of the burden of propping up prices by managing
supply to demand, a strategy that has served the cartel well in
the last two years.
Saudi Arabian Oil Minister Ali al-Naimi said on Thursday that
OPEC will never cut production unless Russia contributes
significant supply curbs to support the cartel's efforts to
stabilize the oil markets.
Asked whether OPEC's would still cut even without a deeper cut
commitment from Russia, Naimi replied: "Absolutely not, so we all
lose."
"Russia's cut is minuscule and disappointing and we don't take
it seriously," Naimi told a news briefing.
"We've made a very, very reasonable request, Russia's position
is extremely unreasonable. We're in a crisis mode -- the biggest
losers will be Russia and Saudi Arabia," the minister said.
But he stressed "this is not a price war and its not a grab
for market share".
Russian Finance Minister Alexei Kudrin said on Thursday he
hoped his country, under intense pressure from OPEC to cut
exports and output to support crude prices, would be able to work
out a deal with the oil cartel.
Russian Deputy Prime Minister Viktor Khristenko, who
coordinates the government's work with the country's mostly
privately-owned oil companies, saw a chance for talks with OPEC.
"We have not excluded and have never broken off the system of
consultations with OPEC member states about a stable oil market,"
Khristenko told reporters in Azeri capital Baku.