The Ministers of Petroleum Resources from OPEC and OPEC+ member countries have acknowledged the inadequacies of the organization’s market predictions, emphasising the need to increase the organization’s market dominance from 40% to 60% to coordinate, stabilize, and ensure market data certainty among its members.
The leaders mentioned this during the first Ministerial session, on Day 1 of the 8th OPEC International seminar currently ongoing in Vienna, Austria.
According to them, achieving market stability by positively controlling production, will not only benefit OPEC and OPEC+ but also the oil-producing and consuming nations.
EnergyDay’s check showed that during the early years of OPEC, the oil-producing countries had a 50/50 profit agreement with the oil companies, which guaranteed stability and certainty. Since the 1980s, representatives from Egypt, Mexico, Norway, Oman, Russia, and other oil-exporting nations have attended many OPEC meetings as observers.
OPEC approached Guyana with a proposal to become a member, but Guyana refused, stating that it wanted to focus on production growth. Guyana has become one of the fastest-growing crude oil producers in the world since it began producing oil commercially in 2019.
Brazil has also resisted becoming a member of the group, preferring to go it alone. However, Indonesia left OPEC in the mid-2000s when it became a net oil importer but later rejoined the cartel.
Ambassador Gabriel Aduda, the Permanent Secretary of the Ministry of Petroleum Resources, in his comment at the 8th OPEC seminar and stated that OPEC and OPEC+ have helped to achieve market stability by positively controlling production.
Aduda emphasized that a market that cannot be controlled cannot be predicted, and if it cannot be predicted, it cannot be sustained.
He said, “To a large extent, all oil-producing countries should consider being part of OPEC in order to properly coordinate the market and ensure prediction.”
This, according to him, is the surest way to promote and guarantee investment, adding that investors do not invest in a market without accurate data and indices.
Mr. Suhail Al Mazrouei, Minister of Energy and Infrastructure of the United Arab Emirates, has expressed his concern that the market is not appreciating OPEC’s market dominance and predictability due to speculations on data.
He suggested that OPEC should consolidate the data it collects and validate it with other independent data to perfectly predict the future of the market with real facts.
He said that the appreciation of OPEC is not visible due to speculations on data. He added that the market is listening more to the traders and speculators.
He said, “If OPEC is committed to forecasting the market right, then it has to consolidate the data that it collected and validate them with other independent data.
“This would enable OPEC to perfectly predict the future of the market with real facts. We need to reconcile the paper market with the actual market feeding into the prediction and future.
Mazrouei, also suggested that oil traders should be fully integrated into OPEC’s data collection framework to ensure a consolidated market.
Parviz Shahbazov, Minister of Energy Azerbaijan, has encouraged OPEC and OPEC+ to take more actions in order to take full control of the global oil market.
He expressed optimism about the future of the market but observed that the drop in the market size from $900 billion to $300 billion in 2021 is a sign of an ailing market that could potentially decline further if something drastic is not done.
He referenced Goldman Sachs’ prediction of a severe decline in global oil trade in 2024 and 2025 of a potential loss of about $10 million per year but emphasized that the projected decline is huge and must be taken seriously.
He said, “The bigger OPEC and OPEC+ will determine its ability to control the market more. ”
He suggested that OPEC and its allies should expand their presence beyond the border of crude oil and gas also into energy transition and other sources of emerging energy markets.
EnergyDay gathered that the OPEC Seminar which commenced on Wednesday, July 5, and ended on Thursday, July 6 provided an ideal platform for all stakeholders to engage with each other on key issues pertaining to the energy transition.
The oil-producing and consuming nations during the conference came together to discuss ways to achieve energy security, technological advancements, and environmental challenges.