Iraqi Oil Minister Says Oil Prices Are Too Low — Update

23 Dec 2015 | Author: | No comments yet »

Crude oil prices rise in Asian trade after USA fed rate hike.

Crude prices are set to rise from current “very low” levels that are hurting producers, Iraq’s Oil Minister Adel Abdul Mahdi said after a meeting of Arab petroleum-exporting nations.Spaniards are voting Sunday in the tightest election since the country’s return to democracy, with four parties in the running and no clear majority in sight.

TEHRAN, Dec. 20 (MNA) – Director of Petro Scotland expressed his skepticism towards IEA forecasts, saying that once the oil price approaches $60/barrel for any length of time, there are some possibilities to lead to the oil price collapsing again.West Texas Intermediate for January delivery, the front-month contract, was down 5 cents to $35.47 a barrel by 07.42 GMT after finishing down almost 5 per cent on Wednesday. Abdul Mahdi, whose country is the second-biggest producer in OPEC, didn’t forecast when prices would rebound from an almost seven-year low for Brent, the benchmark for more than half of the world’s oil.

The election will show how much life is left in the two-party system that saw Prime Minister Mariano Rajoy’s People’s Party and its traditional rival, the Socialists, alternate in power for the past 33 years. Qatar’s Energy Minister Mohammed Al Sada told reporters before the meeting in Cairo there was no need to be pessimistic about prices. “There is no doubt that oil prices will rebound,” Abdul Mahdi told reporters after the meeting of the Organization of Arab Petroleum Exporting Countries. “This current level is too low, and it’s affecting oil producers. Iran is trying to lure back international oil companies to develop its vast oil and gas reserves once sanctions are lifted under a deal with world powers, and recently lifting of four of them on Iran’s petrochemical industry. United States crude stocks went up last week too since Gulf Coast imports went up and the data presented by the EIA on Wednesday surprised analysts who were expecting the inventories to fall. I think economic factors and fundamentals are still strong.” A global oversupply of crude has triggered the worst slump in the energy business since the 2008 world financial crisis.

Crude stockpiles have expanded to 490.7 million barrels, the highest for this time of year since 1930, the Energy Information Administration reported. Even the upgrade of existing infrastructure takes considerable time to mobilise even when financing is both available and deliverable into the contractors’ bank accounts.

Rajoy said after voting in Madrid that he was told there was good turnout, while Socialist leader Pedro Sanchez said after casting his ballot that he could “smell change.” Spain’s disenchantment with its traditional political class is part of a wider phenomenon that’s seen voters embrace new faces. The US Fed raised interest rates for the first time in nearly 10 years this Wednesday since it believed that the country’s economy had overcome most of the calamity which had been caused by the financial crisis of 2007-2009. With candidates including Donald Trump and Bernie Sanders challenging mainstream party lines in the U.S., figures likes radical anti-establishment Greek Prime Minister Alexis Tsipras and Canadian Premier Justin Trudeau and his youthful optimism have swept aside conventional opponents elsewhere.

The dollar hit a 2-week high against a basket of currencies, making oil and other commodities denominated in the greenback less affordable to users of the euro among others. OAPEC was established in 1968 to foster the development of the petroleum industry in member states as part of an economic integration plan among Arab countries. In the short term, unwise action by Iran – such as dumping oil stored in tankers on the market, or rapidly ramping up production to sell into the market – can benefit only the buyers, who will probably think that Christmas has come early!

They’ve seen the unemployment rate soar to more than 20 percent three times in 30 years and failed to fix the divisions between temporary and permanent jobs in the labor market. Traditional parties are likely to be challenged and could well lose their dominance,” said Geoffrey Minne, an economist at ING Bank in Brussels. “It is likely that a fresh approach could lead to important changes in the political system, and notably, on the accountability of the government.” A Gesop poll published by El Periodic d’Andorra Thursday showed the PP at 26.2 percent with the Socialists in second place with 21 percent. The IEA said in a monthly report in December that growth in demand for oil will ease next year to 1.2 million barrels per day, from 1.8 million barrels a day this year. He warned against a grand coalition of “losers,” invoking the Portuguese election in October, where a left-wing alliance ousted a conservative government that had the most votes.

Firstly, the IEA assumes that consumer nations will be able to pay for increased demand no matter what the price is, and this is manifestly not the case. Secondly, it is impossible to tell how much of China’s demand in particular is for refining and consumption, and how much is simply for storage both as a strategic reserve and on the premise that at the zero $ interest rates which applied until last Wednesday, reserves of oil also represented a better investment than holding reserves of dollars. The Socialists and Podemos have made it their mission to oust the PP, while Ciudadanos’s leader, Albert Rivera, has repeatedly said he won’t enter a formal coalition if he’s not prime minister.

In other words, I believe that the global market in oil has reached a point of ‘Peak Demand’ which demonstrates another of Mr Yamani’s observations to the effect that the Stone Age did not end because of a shortage of stones, and the Oil Age will not end because of a shortage of oil. Finally, in answer to your question concerning production cuts, this lack of co-operation is a consequence of the existing dysfunctional market model of ‘oil-as-a-commodity’ where oil is bought and sold for transaction profit by middlemen.

Such an oil for product swap is in the interests of everyone other than those who seek something for nothing, and it gives rise to an energy-as-a-service market model where collaboration and transparency are in everyone’s interests. What will be the effect of offshore development and rig building, having lower costs, on oil market prices and how will it be affected by the current oil market situation?

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