OPEC Awaiting Meeting with Producers Before Deciding on Supply

OPEC is in the dark on the oil supply outlook for the second half of this year, with Iranian and Russian outages looking increasingly significant but Saudi Arabia reluctant to pump more due to fears of a price crash, sources in the organization said.


West Texas Intermediate graph

An oil contamination forced Russia to halt flows along the Druzhba pipeline, a key conduit for crude into Eastern Europe and Germany, in April. The suspension left refiners scrambling to find supplies and its duration is unclear.

Iran’s oil exports are likely to drop further in May as the United States tightens the screw on Tehran’s main source of income. Shipments from Venezuela, also under U.S. sanctions, could fall more in coming weeks.

The dearth of information is a headache for OPEC and allies led by Russia, which gather in June to decide whether to renew a supply-cutting deal. A panel of ministers meets on May 19 in Saudi Arabia to discuss the market and make recommendations.

Two delegates from the Organization of the Petroleum Exporting Countries said the Russian outage, on top of Iranian and Venezuelan export losses, would be discussed at the Jeddah meeting and it seemed more than a short-term technical glitch.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza