As global oil market struggles with oversupply and tumbling prices, Venezuela called for an emergency OPEC meeting to stabilize prices. But, the proposal was met with strong opposition coming from Saudi Arabia and Qatar.
The emergency meeting is supposed to gather OPEC and non-OPEC oil producers including Russia to discuss and take measures to prevent prices from going further down.
Venezuela, which is an OPEC founding member, needs oil prices to go up again in order to have enough money to buy imports of food and medicine the country is so bitterly dependent upon. Even before the oil price crisis, Venezuela struggled with a rampant inflation and chronic shortages of basic items.
The proposal of an OPEC meeting was made this week by the Venezuelan president during a meeting in Doha with top officials from Saudi Arabia, the United Arab Emirates, and Qatar.
But the rich Gulf oil exporters did not agree with the proposal over concerns that failed negotiations may do more harm than good.
Oil prices are now more than 50 percent lower than they were in 2014 dues to an excess supply of crude oil and OPEC’s policy of keeping prices down to prevent rival oil exporters from grabbing an even larger market share. Additionally, top OPEC exporters declined to trim their oil production despite of plunging prices.
People familiar with the matter told reporters that top exporter Saudi Arabia believes that it is best to leave the market alone for the moment. Another source said that failed negotiations would sink prices even lower.
“If we are meeting for the sake of meeting, it would backfire,”
a person familiar with the matter said.
On Thursday, Quatar announced that OPEC and non-OPEC oil producers were analyzing Venezuela’s proposal. Nevertheless, Doha admitted that they were still in the “study phase.”
But Venezuela is not at its first attempt for an emergency meeting with other, non-OPEC oil exporters. The country has been pushing other OPEC members for months into that direction. Venezuela’s President Nicolas Maduro said late Thursday that he believes his country’s efforts are “sabotaged” by the U.S.A. globally.
Maduro added that the presidential summit is the best solution to prevent prices from further tumbling. He also said that prices could be stabilized through measures OPEC and non-OPEC countries can agree upon without losing their sovereignty.
As of now, in the South American country the price of an oil barrel sank to $39.
Other OPEC members also want an emergency meeting. Algeria submitted a letter to OPEC expressing its concerns about the prices, while Iran is indirectly backing the idea of an emergency producer summit.
But Gulf OPEC producers are clearly against the proposal and there are slim chances they will change their mind any time soon.
Image Source: Wikipedia
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