Algeria leads exporters' charge to rally oil prices
Algerian President Abdelaziz Bouteflika鈥檚 government has begun a series of talks with oil producing countries, whether they鈥檙e members of OPEC or not, to find ways to reverse the nearly 9-month-old plunge in crude prices. But Algeria鈥檚 approach may conflict with OPEC鈥檚 own pricing strategy.
Bouteflika鈥檚 drive included a meeting on March 16 of Algeria鈥檚 energy minister, Youcef Yousfi, with Angolan Oil Minister Jose Maria Botelho de Vasconcelos and Haruna Ginsau, Nigeria鈥檚 ambassador in Algiers, the Algeria Press Service (APS) reported. Both are OPEC members. On Monday the president spoke of oil prices with Borge Brende, the foreign minister of Norway, a non-OPEC oil producer.
鈥淭he drastic fall in oil prices has had an extremely negative impact on the economies of all exporting countries, whether OPEC or not members of the Organization of Petroleum Exporting Countries,鈥澨齛fter the meeting. (Related:听)
Bouteflika has also invited other oil-producing countries to join the occasional talks. They include Azerbaijan, Colombia, Congo, Equatorial Guinea, Kazakhstan, Mexico and Russia.
APS said听听is 鈥渢o consider the possibilities to consolidate cohesion between the exporting countries so [as] to find [a] joint solution to this situation鈥� of oil鈥檚 price crash. It didn鈥檛 elaborate.
The reactions of participants in the talks so far ranged from noncommittal to enthusiastic, according to APS. It quoted De Vasconcelos as saying only that he and others at the March 16 meeting 鈥渆xchanged viewpoints and thinking on the international oil market situation.鈥� (Related:听)
But the agency quoted Ginsau as characterizing the talks as an important step to stabilizing the price of oil. 鈥淭he impact of the oil price decline is so important, especially for African countries, that it is necessary that we all remain together to share our experience and come up with strategies that would allow us to find a solution,鈥� he said.
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Several of the countries invited to the Bouteflika meetings are hurting financially because they rely heavily on oil for government revenues. Non-OPEC Russia, for example, has been forced to听听to deal not only with the low oil prices but also with Western sanctions.
And 10 of OPEC鈥檚 12 members 鈥� all but Qatar and Kuwait 鈥� can no longer rely on oil exports to balance their budgets,听. And although Saudi Arabia is losing money, Bloomberg says, it can ride out a long period of low prices because its treasury has a financial reserve of nearly three-quarters of a trillion dollars. (Related:听)
The question is whether Algeria鈥檚 call for talks is at odds with OPEC. At its production-setting meeting in Vienna on Nov. 27, the cartel, led by Saudi Oil Minister Ali al-Naimi,听, even though oil prices had been plummeting since late June.
Al-Naimi said the strategy was to allow oil prices to fall so low that OPEC鈥檚 biggest competitors, including US shale-oil producers, wouldn鈥檛 be able to afford to extract oil using methods that are more expensive than conventional production methods. It seems unlikely, therefore, that loyal OPEC members would join Bouteflika鈥檚 effort to restore oil prices in a way that runs afoul the cartel鈥檚 strategy.
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