Concerns about a global oil glut continue to mount as the price of crude oil continues to crash, prompting the Organization of Petroleum Exporting Countries (OPEC) to schedule a meeting where the prices of oil might be reviewed, but industry experts agree that they see no way the meeting could impact the abundance of fuel inventories and its resultant price crash, Bloomberg reports.
And as if to drive home this point, OPEC stated in its monthly report that the weak demand for global oil may persist, considering the fact that prices have crashed through the roof in a three-month low. To this extent, European and US oil refineries may have no alternative than to cut down on their output as a way of dealing with the problem.
OPEC Members Increased Oil Production in July
In July, Saudi Arabia produced 10.477 million barrels of oil a day after increasing its output by 123,000 barrels daily, and Iraq rose to the occasion by increasing production by 57,000 barrels a day to cap 4.606 million barrels of crude oil per day. Throughout the month of July, OPEC member countries jointly increased production by 46,400 barrels per day to reach 33.106 million daily productions.
Since crude oil refiners could only respond to the problem of reduced oil demands by cutting output, industry experts predict that the trend will be reversed with the approach of winter in the Northern Hemisphere as the year comes to an end.
Why OPEC’s Meeting May Not Impact on the Current Situation
OPEC’s 14-member states have agreed to hold a meeting in Algeria in September to resolve ways to hike oil prices and limit production, but a potential cog in the wheel to their meeting is the fact that many of its members still produce below capacity, according to Times of Oman. Nigeria, Libya, and Iran among others still produce below expected capacity and this fact is anticipated to cast a gloom on resolutions that could be reached at next month’s meeting.
Meanwhile, Saudi Arabia is OPEC’s largest member and it has shown bias toward limiting oil production for member states. Considering the fact that OPEC held meetings in April and June with nothing substantial resulting from the conferences, experts think the scheduled September meeting might not be any different seeing that members could not agree on hiking oil prices and limiting production, the CNBC wrote.
Where Does the Ball Lie Now?
It is quite difficult to state categorically what will happen to global oil markets before the end of this year, but indicators reveal that OPEC members wield a strong influence on crude oil production and its ancillary price indexes. The truth however is that all the member states do not have equal production scales and they are not subjected to the same regional challenges that impact production levels, hence the difficulty for members to find a common voice over a common problem. But then, the OPEC meeting scheduled for next month might yield a few pointers on the way to go in dealing with global oil glut and falling oil prices – in the face of declined demands.