The agreement between OPEC and Russia came as a surprise for most. Until the Vienna meeting started, there was much pessimism that a deal would be reached and all indications had been that negotiations were deadlocked over the issue of who would cut by how much. The breakthrough seems to have come when Moscow changed its position from “freeze but no production cut” to agreeing to reduce output by 300,000 b/d from the 11.2 million b/d it reached in November. This change, plus the agreement by Baghdad to cut oil production by 210,000 b/d, was enough to convince the Saudis to cut by 486,000 b/d and the other Gulf Arab states would join in for at total Gulf Arab cut of 786,000 b/d. Libya, Nigeria, and Indonesia were left out of the agreement and Tehran was allowed to increase production by 90,000 b/d to 3.8 million – somewhat short of their 4 million b/d goal. Given the bad relations between Riyadh and Tehran, allowing the Iranians to continue increasing production was the toughest part of the deal for the Saudis to swallow.
Archive for October, 2013
On October 19, 1973, the Organization of Arab Oil Exporting Countries (OAPEC) proclaimed an embargo of oil exports to the United States, in response to U.S. support for Israel in the 1973 Arab-Israeli War. The embargo, which was accompanied by cuts in overall production by OAPEC countries, lasted until March 1974. Oil prices shot up […]
By Tom Whipple 1. Oil and the Global Economy New York oil prices fell last week during volatile trading, closing Friday at $102.02 amidst concerns about the US government shutdown and the possibility of a US debt default later this week. London crude, however, which is more concerned with problems in exports from Libya and […]
By Tom Whipple 1. Oil and the Global Economy The price drop which began in early September continued through last Tuesday, but reversed on Wednesday following the news that the southern leg of the Keystone pipeline would be opening before the end of the year. New York oil traded around $103 on Thursday, then on […]
By Steve Andrews. Early last week, Shell Oil announced it was shutting down its oil shale research project in western Colorado. Combine their departure with Chevron’s exit back in February 2012 and you can count another nail in oil shale’s coffin. Yet since this unconventional resource ranks among the largest in the world, estimated by […]
By Tom Whipple 1. Oil and the Global Economy Oil prices were little changed last week with New York crude trading around $103 a barrel and London around $108. While several of the usual factors moved prices last week – stronger Chinese manufacturing numbers, a falling dollar, and a rebound in Libyan exports – most […]