As the Organisation of Petroleum Exporting Countries (OPEC) prepares to meet next week alongside the International Energy Forum in Algeria, the rumour mill is running at full steam.
Oil climbed on the global markets as Venezuelan President, Nicolás Maduro, told tale of “positive discussions” with regards to an oil price freeze as September comes to a close. Venezuela has suffered more than most countries in the wake of the oil price rout, with the world’s highest rate of inflation and everything from rolling blackouts to erupting food riots threatening to disintegrate any façade of socioeconomic and political order.
Whilst the country with the world’s largest proven oil reserves descends into bedlam and oil production reaches a 13-year low, two nations that have suffered the blight of domestic strife are on the verge of a re-entry into the fray.
The ceasefire agreed by the paramilitary group the Niger Delta Avengers, is allowing the country to address oil production that fell to a 20-year nadir in May 2016. Some 5,000-kilomtres away in a country that is more than 60 per cent Sahara, rival forces in the Libyan civil war trade blows and exchange control over essential oil assets.
The Government of National Accord (GNA) based out of Tripoli in league with Libya’s National Oil Company (NOC) was about to restart exports from the Zueitina and Ras Lanuf terminals when they fell into the hands of forces loyal to Khalifa Haftar and his “Operation Dignity” movement. Having subsequently arranged a deal between Haftar’s forces, the NOC will carry on in its export plans in a move from producing less than 300,000 barrels per day (bpd) to a pre-civil war level of 1.6 million (bpd).
Analysts have projected that as much as 800,000 bpd may enter the market from these crisis-addled states in the coming months. Scrabbling to recoup gains from their primary source of government revenue, it is unlikely that two nations that represent 85 billion barrels of proven reserves will welcome a production freeze or retrenchment in output.
Unsurprisingly, the commodities world is once again pendant on the deliberations of a handful of men. Whether they will exit that room in Algiers singing the same tune remains to be seen….