According to CNBC Report, Opec have discussed holding an emergency meeting if oil price continues to slide, according to Nigeria’s oil minister – Diezani Alison-Madueke.
The comments by Diezani Alison-Madueke come three months after the cartel’s decision to hold production at 30m barrels a day, even as the oil price has plunged since mid-June.
Also, driven by Saudi Arabia and its Gulf allies, marked a sharp deviation from Opec’s traditional strategy of adjusting production to keep prices high. The group’s main objective is now to defend market share, despite dramatically reduced revenues.
The price plunge has forced energy companies all over the world to rewrite their investment plans, and caused a major slowdown in the US shale oil industry. But it has also thrown the fiscal balances of big oil producers such as Nigeria, Venezuela and Russia into disarray.
“Almost all Opec countries, except perhaps the Arab bloc, are very uncomfortable,” said Ms Alison-Madueke, who as president of Opec is responsible for liaising with member countries and the producer group’s secretary-general in the event of an emergency meeting.
If the price “slips any further it is highly likely that I will have to call an extraordinary meeting of Opec in the next six weeks or so”, she said in an interview with the Financial Times. “We’re already talking with member countries.”
After hitting a high of $115 a barrel in June, the price of internationally traded Brent crude oil has dropped rapidly and almost hit $45 a barrel last month — a near six-year low. Although the price has since recovered to around $60, Ms Alison-Madueke said she was not convinced a floor had been reached.
“It is hoped that [the price] will stabilise at no less than $60, but we cannot be sure,” she said.
Ms Alison-Madueke said Opec’s role needed to be reconfigured over the next two years “if we are to remain strongly relevant”, by formalising discussions with key oil producers outside of the cartel such as Russia and the US, as well as global groups like the International Energy Agency and the G20.
“It cannot only be Opec that is responsible for stability in the market,” she said. “The world has moved on from the days that Opec was the be all and end all.”
Opec is scheduled to meet next in June, although in times of market turmoil the group often convenes emergency meetings. But all 12 members have to agree to such a move.
Ms Alison-Madueke said members were “very cognisant of the Saudi position.”
In a bid to protect market share, the kingdom convinced fellow members that a period of lower prices would shave off some supply from rival producers, such as the US, with higher production costs.
Ali Al Naimi, Saudi Arabia’s veteran oil minister, said in December said it was braced for further drops in the oil price and would not change its strategy even if prices hit $20 a barrel.
Ms Alison-Madueke said she supported the November decision. “When you cede market share continuously, you drive yourself into oblivion,” she said. But she added that many Opec members “are going to suffer greatly from a drastic fall in the price”.
The slide in the oil price has plunged Nigeria’s economy into turmoil, while the government’s decision to postpone national elections by six weeks to March 28 on security grounds has only deepened the sense of uncertainty. The country, which is Africa’s largest producer, depends on oil typically for about 80 per cent of government revenues.