OPEC is not going to cut production

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More OPEC jawboning this morning, this time from Nigeria via Reuters:

The mood inside the Organization of the Petroleum Exporting Countries (OPEC) is shifting from mistrust to a growing consensus that a decision must be reached on how to end the global oil price rout, Nigeria’s oil minister told Reuters.

…”There’s increased conversation going on. I think when we met in December … they (OPEC members) were hardly talking to one another. Everyone was protecting their own positional logic,” Nigerian oil minister Emmanuel Ibe Kachiwku told Reuters in an interview.

“Now I think you have cross-logic … they are looking at what are the deficiencies, what is the optimum.”

Struggling oil producers have made repeated calls for an emergency OPEC meeting, but Kachikwu said that the timing had not been right. The cartel’s next regular meeting is in June.

“We haven’t been sure that if we held those (emergency) meetings that we could actually walk away with some consensus,” Kachikwu said.

“A lot of barrels are tumbling out of the market from non-OPEC members, so the Saudi philosophy is obviously working. But it’s not influencing the price higher, which means that whether we like it or not some barrels are coming in from … members and non-members to cover whatever is dropping out.”

Not much has come out at all, actually. But it will, which is the goal. So why stop now?

Moreover, Saudi Arabia, Russia and Iran are just about at open war today, from The Independent:

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Saudi Arabia is sending troops and fighter jets to Turkey’s Incirlik military base ahead of a possible ground invasion of Syria.

The Turkish foreign minister, Mevlut Cavusoglu, confirmed the deployment in a statement to the Yeni Şafak newspaper on Saturday, days before a temporary ceasefire is due to come into force.

“Saudi Arabia declared its determination against Daesh (the Arabic term for Isis) by saying that they were ready to send both jets and troops,” he said.

…Adel al-Jubeir, the Saudi foreign minister, said Russia’s intervention would not help Assad stay in power in an interview published today.

“There will be no Bashar al-Assad in the future,” he told a German newspaper.

…“Russia’s target is supporting Assad, we all know that,” he added. “But the question is this: Who will stop Russia doing that?”

Ash Carter, the American defence secretary, said on Friday that he expected the Saudis and the United Arab Emirates to send commandos to help recapture Isis’ Syrian stronghold and de-facto capital of Raqqa.

Saudi Arabia and Turkey are among Assad’s foreign opponents who have been supplying selected rebel groups with weapons via a Turkey-based operations centre.

Some of the vetted groups, mainly part of the Free Syrian Army, have received military training overseen by the US Central Intelligence Agency.

In the wake of Saudi Arabia’s proposal to send in ground troops on Thursday, the Russian Prime Minister claimed the move could spark a new world war.

“A ground operation draws everyone taking part in it into a war,“ he told the Handelsblatt newspaper.

“The Americans and our Arab partners must consider whether or not they want a permanent war.”

Russia started its intervention in September at the request of Assad, Vladimir Putin’s long-term ally, to support the Syrian regime.

The Kremlin has repeatedly claimed it is bombing “terrorists” but has been condemned by the UN and the international community for evidence it is predominantly targeting civilian areas held by anti-government rebels.

Russia’s intervention is supported by Iran, which admits sending troops to train Syrian forces but has been accused of sending its them into combat with rebels.

Iraqi Shia militias and fighters from the Lebanese group Hezbollah are also fighting the Syrian opposition.

Oil might get a short term lift from the conflict but Saudi and Russia, as well as Saudi and Iran are going to agree on nothing, least of all giving oil market share to one another.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.