October 1, 2015 - OPEC unlikely to change its "policy of inaction"

OPEC month-to-date basket price in September averaged $45.03 per barrel, compared to $45.46 per barrel in August and $54.19 per barrel in July.

Quarter-to-date basket price in the third quarter of 2015 averaged $48.52 per barrel compared to $59.9 per barrel in the second quarter, according to data, obtained by Trend from OPEC.

Oil prices on the world markets rose on September 29, and then dipped again overnight in response to mixed messages on supply from the latest data on US stockpiles, which showed a surge of 4.6 million barrels, a figure well above the consensus forecast of 102,000 barrels, according to Reuters.

Despite the continuous drop in oil prices OPEC does not seem to hurry up with the measures to stabilize the situation. Though, the cartel recently stated about its readiness to cooperate with non-OPEC countries, its behavior suggests otherwise.

Early this week Kuwait’s oil minister Ali al-Omair said that OPEC has no plan to participate in a summit of oil producers proposed by Venezuela to support prices. Venezuelan President Nicolas Maduro earlier this month proposed a summit meeting between major world oil producers from OPEC and non-OPEC members to discuss slashing production to shore up prices that have slumped by more than half.

“There will be no conference before December 4. The problem is that there is no commitment from non-OPEC producers for what they will undertake to help stabilise the market,” Ali al-Omair said.

Commenting on inactivity of OPEC member states in stabilizing oil prices through coordinated efforts Tom Pugh, the economist at British economic research and consulting company Capital Economics told Trend that OPEC has always been more a support group where oil exporting countries can discuss the problems they are facing and try to help each other, rather than simply a mechanism for trying to keep prices high.

With regard to Indonesia’s wish to rejoin OPEC, Pugh believes that the country is likely suffering due to low prices and wants to seek advice on how other countries are coping.

Indonesia’s energy minister Sudirman Said earlier told Reuters that the country hopes its return to OPEC in December will bring Asia’s top gasoline importer closer to the world’s main oil producers and ease its reliance on a small group of traders for supplies.

OPEC is expected to approve Indonesia’s request to reactivate its full membership at the group’s next meeting on Dec. 4.

Indonesia may also think that by lending it’s voice to calls for cuts in production it may help sway the balance, Pugh believes.

“However, I don’t think the re-joining by Indonesia will have a significant impact on the groups dynamics, it will probably join the likes of Venezuela and Iran in calling for output cuts but this will have little impact on Saudi Arabia's policy,” he said.

Currently, OPEC’s quota for oil production is 30 million barrels per day. However, the member states do not comply with this quota.

Saudi Arabia and other Gulf states pushed OPEC's strategy shift last year to defend market share rather than cut output to support oil prices, which experienced a historic fall as US oil prices fell below $40 a barrel on Aug. 28 for the first time since the 2009 financial crisis.

OPEC last met this summer in Vienna, when it agreed to leave its production ceiling unchanged at 30 million barrels per day.

OPEC oil production averaged 31.544 million barrels per day in August, compared to 31.531 million barrels per day in July, according to the organization’s Monthly Oil Market Report published on September 14.