Oil has been a hot topic ahead of the OPECmeeting on May 25. For the past six months there has been a production cut in place, with compliance from member states proving very positive at around 90 percent.
Saudi Arabia and Russia have both stated their desire for global producers to continue with the cuts through to 2018. But seasonal factors that helped to boost compliance in the first half of this year are fading away as the season for the highest demand is upon the industry.
OPEC is struggling to maintain its dominance over US shale producers, whilst Iranian production remains a grey area as the elections wrap.
Can the world’s top producers prevent another collapse in the price of crude?
Richard Mallinson, energy analyst and partner at Energy Aspects, is optimistic about the continued cooperation of the OPEC states as per the kingdom’s and Russia’s request. “It is quite likely that a lot of diplomacy was done, at least amongst the GCC in a few key countries, before the Saudi and Russian announcement… we’ve seen many other countries in the OPEC group, and some of the none OPEC countries that were part of the cut, confirming that they are keen for an extension,” he says.
As for OPEC’s dilemma where the rising US shale markets are concerned, Mallinson says there is room for everyone in the market, “OPEC still matters, it still has influence, but it is needing to adapt to the new reality which is going to include US shale production for the forseeable future.”
Richard Mallinson joins us from Energy Aspects in London to discuss whether OPEC can keep oil prices buoyed.