Opec veteran says oil price a 'disaster' and cartel powerless

Dec. 11, 2014

Opec veteran says oil price a 'disaster' and cartel powerless

Senior adviser to Qatar's emir and former Opec president tells the Telegraph the global oil market is now over-supplied by as much as 2m barrels per day of crude

Former Opec veteran says cartel now powerless to halt falling prices.

By Andrew Critchlow, Commodities editor

اقتباس :: Opec is now "powerless" on its own to prevent oil prices falling further because of a 2m barrels per day (bpd) surplus of supply in the market and the cartel should seek a deal with Russia, Norway and Mexico to arrest the decline, according to a senior Gulf official.
Speaking exclusively to the Telegraph, Abdullah bin Hamad al-Attiyah, a senior adviser to the Emir of Qatar and a former president of the Organisation of Petroleum Exporting countries (Opec) said: "Opec can't solve this problem alone like before, now it's a different story. Russia, Norway and Mexico all must sit down with Opec to discuss making cuts."
However, Mr al-Attiyah - who was one of Opec's longest serving oil ministers when he led the Qatari delegation - said that he doubts the group of 12 producers will agree to an emergency meeting unless producers outside the cartel agree to also rein in production. He added that the oil market currently was suffering from an oversupply in the region of 2m bpd, most of which is coming from production outside the group.
"It's a disaster," said Mr al-Attiyah. "Opec should meet with non-Opec countries to resolve this but America will never cut production."
Opec agreed to leave its production unchanged at 30m bpd at last month's meeting sending oil prices spiralling lower. Brent has fallen around 44pc to $64 per barrel in the last six months in its steepest decline since the onset of the financial crisis in 2008. Led by oil exporting kingpin Saudi Arabia, Opec has decided to keep pumping at full choke instead of surrendering further market share to shale oil producers in North America, which it sees as a threat.
The group's share of the global market for around 90m bpd of crude has fallen to a third from around half over the last 20 years as new oil basins have opened up around the world and better technology has made tapping shale rock formations in the US possible.
Qatar is an Opec member and the remarks from Mr al-Attiyah - a close adviser to the ruler and oil industry heavyweight in the Gulf region - show the level of anxiety now present in the Middle East's petrodollar economies. Gulf Co-operation Council countries - Saudi, Qatar, the United Arab Emirates, Kuwait, Oman and Bahrain - depend on crude oil exports as their main source of foreign currency earnings.
However, these states most of whom form the core of Opec have resisted calls from other members for an emergency meeting of the group in February in a move which has triggered a price war globally.
"Without other cooperation I don't see another emergency meeting of Opec," said Mr al-Attiyah.
His comments comes as rulers of the GCC states have gathered in Doha for their annual summit where falling oil prices, tackling the rise of the Islamic State in Iraq and Iraq across the Persian Gulf were high on the diplomatic agenda.