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Venezuela Wants Oversupply of 2 Million B/D Taken Out of Oil Market

Venezuela wants oversupply of 2 million barrels of crude oil a day taken out of the oil market, and both Venezuela and Algeria say they would be ready to join an OPEC production-target cut.

The comments by the representatives of the two oil producers, who were speaking before a crucial meeting of the Organization of the Petroleum Exporting Countries to address a plunge in oil prices, signaled a continuing rift with Saudi Arabia, which has hinted a production-ceiling change isn't needed.

Speaking to reporters ahead of the OPEC meeting, Venezuelan Foreign Minister Rafael Ramirez said oversupply was currently 2 million barrels a day and he wanted it "out of the market."

He refused to say how much Venezuela would want OPEC to reduce output, but hinted it would be large. "This cut, as we proposed, has some level similar to Oran," Mr. Ramirez said. At a meeting in the Western Algerian city of Oran in December 2008, OPEC slashed its production allocations by 2.2 million barrels a day amid the financial crisis--its largest reduction ever.

Mr. Ramirez and Algerian Energy Minister Youcef Yousfi said their countries would participate in a reduction if that's what OPEC decided.

Speaking separately with reporters ahead of the meeting, Mr. Yousfi said Algeria wants oil prices to return where "they were before the [price] reduction."

Global oil prices have fallen by about 30% to around $80 a barrel, from a high of about $115 a barrel in mid-June, because of a production glut.

If oversupply continues, "the risk is that the price will fall down for a long time," Mr. Ramirez said, adding that could also hit Arctic and shale oil production.

Venezuela and Algeria both rely on oil prices being above $100 a barrel to balance their budgets.

The Wall Street Journal
Published on:
November 27, 2014
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