Brazil to join Russia, Kazakhstan in OPEC cooperation talks
Oil and Gas Secretary Marcio Felix will leave Friday for the Austrian capital, Brazil’s Energy Minister Fernando Bezerra Coelho Filho said by text message Thursday. Russia, Kazakhstan and Azerbaijan have already confirmed their participation the meeting, where the Organization of Petroleum Exporting Countries will seek the backing of non-members for production cuts to support oil prices.
Brazil’s participation “is an an unquestionably positive development for getting an agreement that stabilizes market sentiment,” Helima Croft, chief commodities strategist at RBC Capital Markets, said by e-mail. “Right now there is still so much skepticism about the prospects for any agreement. I remain very optimistic because of the increasing signs of economic strains in Saudi and other key producers.”
OPEC’s surprise agreement in Algiers last month to make the first supply cuts in eight years will only make a serious dent in a record oil surplus if producers outside the group join in. Brazil, which is developing huge offshore oil discoveries, will boost output by 290,000 barrels a day next year to 2.9 million a day, the biggest increase of any non-OPEC nation, according to the International Energy Agency. The country didn’t join other major producers in a failed push earlier this year to support prices by freezing output.
Cooperation Essential
OPEC agreed on Sept. 28 to reduce output to a range of 32.5 million to 33 million barrels a day. The accord helped push oil prices to a 15-month high above $50 a barrel earlier this month, although they have subsequently fallen amid doubts the group will follow through on its pledge.
A committee of OPEC experts will meet in Vienna Friday to discuss how much each member should cut. The following day, non-members will hold talks with officials from the organization about potential cooperation. The group needs to finalize details of output cuts by its next meeting on Nov. 30.
Brazil has so far given no indication that it would be willing to cap or cut oil production. The country’s economic policy is getting a makeover under President Michel Temer, who came to power in May during the impeachment process of Dilma Rousseff. His administration is focused on reducing the country’s budget deficit, while also promising less government intervention in public companies like state oil giant Petroleo Brasileiro SA.
Some OPEC members have ruled out production cuts. Iraq this week joined Iran, Nigeria and Libya in seeking exemptions from the Algiers deal. Russia, the largest non-OPEC producer, has given mixed signals on its willingness to collaborate. President Vladimir Putin suggested in Istanbul on Oct. 10 that the country was prepared to reduce supply, only to add two days later that it would at most refrain from further increases.
Kazakhstan will participate in the talks in Vienna on Saturday, Interfax reported citing the Energy Ministry. Mexico has received an invitation, Energy Minister Pedro Coldwell said Oct. 25, without confirming whether the country will participate. The nation has attended every OPEC meeting it has been invited to since 2014, he said.
Source: Bloomberg