*Osama Suliman from Vienna
"OPEC" is still slow in dealing with market variables in light of its strong conviction that the market is well-equipped, and its fundamentals are strong in the light of economic data that confirms the continued abundance of supply and the high level of US oil stocks.
Producers are preparing for the first two crucial meetings in Jeddah on May 19 that includes the Ministerial Committee on production control.
The second is the expanded meeting of producers in OPEC and outside on June 25 in Vienna, which is expected to result in a review of market variables and the determination of production policies in the next phase, especially in the second half of the year.
Oil specialists and analysts told the Economist, "Saudi Arabia and the UAE can add 2 million barrels per day immediately, but they prefer to wait until demand growth."
They explained that the cancellation of US concessions to Iranian oil buyers will certainly narrow the supply in an effective manner, especially as it comes in parallel with similar sanctions on Venezuela and less severe unrest in countries such as Libya and Angola.
They pointed out that the market at the gates of relative scarcity of heavy oil in return for the continuation of the vast abundance of light oil led by US production.
Sven Schimmel, director of the German company "VGB Industry", said, "The termination of US concessions granted to Iranian oil buyers on May 2 next put the oil traders in a state of alert and anticipation for the next period."
He pointed out that everyone is confident in the ability of Saudi Arabia to compensate for any drops in supply, but it is clear that there is a desire not to rush and give more opportunity to assess and study the market situation, which will be intensified in the next two months.
He explained that the producers benefited well from the fourth quarter of last year when they accelerated production at record high levels, which led to the collapse of prices sharply and the impact of this significantly on investment and budgets of producing countries.
He pointed out that there is concern in dealing with market variables at this stage, which is evident from Saudi Arabia's statements about the need for recovery in return and marked growth in demand levels before any new increase in supply is confirmed.
For his part, Mofeed Mandra, vice president of Austrian energy company "LMF", said that the decline in supply due to sanctions on Iran may take several months to be clear the impact on the market.
He pointed out that the rapid increase of the rest of the producers may not be in the interest of market stability.
He explained that Saudi Arabia and the UAE will play a major role in supplying the market, which gives reassurance to all industry players that supply concerns may be overstated and will not occur in the light of guarantees provided by OPEC's top producers and beyond.
He said that the current crude oil prices, despite their rise, do not undermine economic growth and do not destroy demand, but on the contrary enhance the new productive and investment capabilities.
He added, "So opening the taps indiscriminately is not in the interest of anyone and will lead to limited and timely gains for consumers because of lower prices."
Rudolf Huber, an energy specialist and director of a specialist site, said that the ready reserves of OPEC is large and Saudi Arabia and the UAE alone can add about two million barrels per day, which is far more than the size of the agreement to cut production to OPEC countries and outside, which is 1.2 million barrels per day and applied since the beginning of this year."
He pointed out that most expectations indicate that there is no movement from OPEC to change production policies before June.
He said that the US production of rock oil also benefit greatly from the rise in prices, where high prices facilitate the increase of supplies, which is of particular concern to the Russian side, which in the next stage would prefer to focus on protecting market shares.
He expected to see the meeting in June between the ministers of "OPEC" and outside of many of the talks on the best production policies and the feasibility of maintaining the decision to reduce the supply of oil.
Andre Yaniv, a Bulgarian analyst and energy expert, said, "Gasoline prices are the biggest concern of Americans, especially as the season of summer trips, or the so-called driving season, which is high demand for gasoline. Hence the US administration demands for price cuts, but OPEC is still on the market, and sees the price of a barrel between 70 and 80 dollars a barrel, which is a good level for the industry in general."
He pointed out that "OPEC" has a consistent strategy is to target the stability of the market and improve its fundamentals, as it is currently concerned about something from rising inventories despite the production crisis in Venezuela and the cancellation of concessions to the buyer of Iranian oil, which makes it quieter in determining the next step, especially as the market is still well equipped now and for several months to come.
In terms of prices, oil offset losses yesterday, as Brent turned to the upside after falling more than a dollar a barrel earlier.
Brent prices settled at $ 71.69 a barrel on Monday, while the WTI crude futures lost 24 cents, or 0.4 percent, to $ 63.06.
Crude fell about 3 per cent in the previous session.
The basket of OPEC crude fell, and its price reached 72.38 dollars a barrel last Friday, compared to 74.04 dollars a barrel the previous day.
The daily report of OPEC said yesterday, "The price of the basket includes averages of prices of 14 tons of production by the member countries of the Organization achieved the first decline after several previous rises. The basket has earned about two dollars compared to the same day last week, which recorded 70.83 dollars a barrel."