Iran may not attend an upcoming OPEC meeting that seeks to discuss an oil output freeze. OPEC Secretary General Abdullah al-Badri, however believes the country will join at a later date. Producers are to meet on April 17 with Badri remaining confident of the meeting addressing the persistent glut in supply.
So far 15 to 16 countries look set to attend the meeting whose outcome could dictate the direction of oil prices moving forward. The meeting is open to both OPEC and non-OPEC members, mostly targeting cartels that control two-thirds of the global production.
Iran has not objected to the meeting, but does not plan to attend as it is currently trying to boost its output after years of sanctions. Its absence is not expected to derail a wider agreement on production freeze. Iran’s absence could, however, affect the impact of any agreement as it continues to ramp up production.
The country currently produces 3.2 million barrels a day and is tagging 4 million barrels. Saudi Arabia, Kuwait and other allies have already shown good will in limiting their output even if Iran does not follow suit.
Badri believes oil prices have bottomed out as seen by a recent rally above the $40 mark. The rise in oil futures comes at a time when output remains in an upward trajectory. Prices could rise further should the upcoming meeting come up with an agreement able to ease the supply overhang.
Getting rid of a supply hang that currently stands at 300 million barrels is the biggest challenge that could derail OPEC efforts. Global oil supply is about 96 million barrels a day outpacing demand by almost two million barrels.
“If we are able to get rid of this 300 million barrels, the overhang, then the price will come back to normal,” said Mr. Badri.
Initiating supply cuts has been proposed by some OPEC members as one of the ways of clamping down on the glut in supply. Badri however believes it may be too early to initiate supply cuts in addition to ongoing discussion around output freeze.