DUBAI (Reuters) – OPEC’s president Angola considers the group should not cut output when it meets on March 15 and instead take time to assess the impact of record curbs made so far, while others are undecided, OPEC sources said on Wednesday.
Angola holds the rotating presidency, which gives it a mediating and not a decisive role. Its influence is limited because it has only been a member of OPEC since 2007.
Independent observers have said its compliance with output curbs has been less strict than that of core Gulf producers.
If prices, which are hovering above $40 a barrel, stay low, one source in the group said the Organization of the Petroleum Exporting Countries would call an extra meeting, rather than cut production again in March.
“Angola, as president of OPEC, will propose at the meeting in March not to carry out more cuts,” the source said.
“It is true that there is an excess of 1.5 million barrels per day (bpd) of oil in the market, but we would rather wait until the second half of the year to decide on more cuts.”
Angolan Oil Minister Jose Botelho de Vasconcelos, speaking on Tuesday, said OPEC would “evaluate the situation,” but did not say what the country would propose to the meeting.
Demand typically reaches its lowest following the end of winter in the northern hemisphere and before the U.S. driving season. In previous years, OPEC has decided at meetings in the first quarter to cut supplies to pre-empt that fall.
At the start of February, a source had told Reuters OPEC might discuss another cut of about one million bpd.
Also in early February, the group’s Secretary General Abdullah al-Badri said the group would consider further curbs, but needed further information first. He said the level of compliance with existing cuts had been very high.
Venezuela, Libya and Algeria have all raised the possibility of another cut.
But Iran, often among the first to demand action to support a higher price, said this week the group should define “a mechanism to repair prices” rather than cut again in March.
Iranian Oil Minister Gholamhossein Nozari did not explain what that mechanism that might be.
The biggest OPEC producer, Saudi Arabia, has made few public comments this year, but said in January it would pump below its official OPEC target and do whatever was necessary to bring the market back into balance.
NO DECISION YET
On Wednesday, sources said other member countries had yet to decide on their stance.
“It is still too early to say if they will cut or not,” one OPEC source said. “We still need to see.”
Since September last year, OPEC has agreed to reduce output by 4.2 million bpd to try to halt a slide that has knocked more than $100 off the record high oil price touched last July.
A Reuters survey found OPEC had so far delivered 81 percent of those curbs, a near record level of compliance with cuts that are the deepest and most rapid yet.
Analysts and OPEC sources have said the oil market is more focused on global economic weakness and its implications for future oil demand than on current market fundamentals, which have tightened in response to OPEC output policy.
Whatever OPEC does, it may have a limited price impact.
“I think given the state of the global economy, we should be glad we’ve got the prices we have. It could be lower,” a third source said.
“Whatever ministers decide, the price isn’t going to be much better. The market is looking at the terrible economic news, not supply and demand …. Why cut then?”