OPEC’s President Emmanuel Ibe Kachikwu said a meeting to discuss reducing oil output would be held in early March (1).
OPEC members were not due to meet until June, but due to the severity of the deterioration in prices, several members of the intergovernmental organisation have called for quicker action.
It is reported that, as the largest oil exporter in the OPEC cartel, Saudi Arabia will have the most influence over OPEC policy going forward. Saudi Arabia has previously resisted calls to cut production, and is keen to maintain market share even in a declining oil price environment (1).
Saudi Arabia, whose oil exports make up 70% of government revenue, sold bonds for the first time since 2007 last year, to help fund a budget deficit considered its widest since 1991 (2).
Anthony Simond, an Investment Manager at London-based Aberdeen Asset Management commented: “They have huge reserves and extremely low debt, but the question is, how long are oil prices going to stay at this level?” (2).
Over the first seven trading sessions of 2016, Brent crude fell by 18.4% from the outset to today. Analysts at consultancy firm Energy Aspects said: “Oil markets have begun [in] 2016 poorly. An exceptionally warm start to the winter… has worsened the existing supply glut” (3).
On Monday, Morgan Stanley joined an increasing number of analysts who are warning that prices could slide to $20 a barrel as per late 1990s prices (3).
The oil minister of the United Arab Emirates, Suhail Mohamed Al Mazrouei said the first six months of 2016 would be tough, but there would be a gradual recovery in the oil market (3).
(1) The BBC. “Oil price down again on oversupply concerns”. bbc.co.uk
(2) Bloomberg. “Saudi Debt Risk on Par With Junk-Rated Portugal as Oil Slides”. bloomberg.com
(3) The Financial times. “Oil prices near $30 as selling continues”. ft.com