OPEC+Russia meeting on Sunday may freeze production at currently high levels
Reports have been in the media for a long time that OPEC will have an unscheduled meeting to discuss production levels. The meeting is tomorrow, 4/17/16.
Finally read an article that makes some sense of why there should be a meeting to freeze production at the currently high, pump-everything-you-can levels which are sustaining the world-wide oversupply.
Check out The Guardian article on 4/16: World’s biggest oil producers meet to discuss possible freeze on production.
Article suggests this is a test run to see if all members of OPEC will comply with a production level and get Russia into the equation. If all of OPEC and Russia will cooperate on holding production level instead of trying to increase, then perhaps, just perhaps, they would then be able to cooperate on coordinate production cuts.
Don’t know if that idea is actually in play. My brain isn’t big enough to understand what thought process is driving the major players. All I can sort out is agreeing to maintain production levels that are contributing to a world-wide oversupply doesn’t make sense to me – it won’t makes things better for any producer, both inside and outside OPEC.
Another wild possibility is that if there is an agreement to do anything and if Russia is part of anything, then perhaps OPEC will have co-opted Russia into their club.
Article gives the following data points for Brent crude:
- ~$110 – approx high point in 2014
- ~$29 – 2016 lows
- $44 – 4/13/16
- $42 – 4/15/16, after fears set in that OPEC would not reach some sort of ‘deal’
- ~$38 – one analyst’s wild guess on how prices might drop if there is no deal
Anyone else have wild guesses what the purpose of the meeting might be?