Azernews.Az

By Fatma Babayeva

An increase which has been observed in the global oil prices since the failure of the top oil producers Doha meeting shows that Iran’s stance in freezing oil output does not have a key role for oil prices any more.

Valentyn Zemlyansky, the director of the energy programs at the Center of World Economy and International Relations under the Ukrainian National Academy of Sciences, made a statement for Trend on May 3.

Zemlyansky believes that the next meeting of OPEC which will be held in June is not going to bring significant results either. However, he expects the oil prices to get stabilized.

He thinks oil prices may stand at $60 per barrel by late 2016.

Of course, as a global commodity, oil price is not affected by only one factor or one player. Production volumes of oil by the U.S shale industry, the outages in production levels of OPEC’s member countries happening from time to time, the economic growth- particularly in Asia, balance of supply and demand and other factors impact the prices of the oil.

The major oil producers gathered in Doha on April 17 to reach an agreement on curbing production level of the oil at the level of January-February 2016. However, the failure was inevitable as Iran and Libya refused to attend the meeting and join oil freezing act.

In addition, the next meeting of the cartel which is scheduled for June 2016 is also expected to end without any success in finding a solution to balance the oversupplied global oil market. Iran’s participation in the next meeting is unlikely to happen as well.

Many experts believe that freezing the oil production is not a solution but rather a cut is needed in production levels. Nevertheless, it is not the case as none of the oil producers want to lose their market share, especially Saudi Arabia who said previously that would not put a cap on its oil output if Iran did not agree to do so.

In its turn, Iran wants to restore export volumes of oil at pre-sanctions levels, and freezing production at the levels of early 2016 does not fit the country’s interests.

Today, maybe, Iran cannot influence the oil prices. In order to return to the previous production volumes of oil, Iran needs to have necessary infrastructure to export its hydrocarbon resources to the global market which will take several years for sure.

The market is expected to clear itself by the end of 2016 and early 2017. However, prices will not surge to its record highs around $140 per barrel that experienced during 2014 in the near future.

In accordance with the latest statistics, the cost for Light crude stood at $43.75 per barrel in NYMEX while Brent amounted to $45.02 per barrel in London ICE on May 4.

In addition, a barrel of Azeri Light crude cost $45.81 at the given date.

---

Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

Follow us on Twitter @AzerNewsAz