Representatives of OPEC have approved today a document outlining the long-term strategy of the cartel. This is a sign that the member states of the organization are having progress in solving their differences on how and when to impose control on oil production and correspondingly prices. The approval of the document was postponed several times. Some member countries, such as Algeria and Iran, insist that OPEC must be ready to defend oil prices by reducing production.
Since late 2014 the Saudi Arabia’s position is that oil prices should be determined by the market and production should not be limited in case to keep the market share of producers. However, after the last rejection of a long-term strategy of OPEC in May, Saudi Arabia changed its mind and in September, OPEC agreed that should limit production to support prices, which is the first decision from this kind since 2008.
Four sources from the organization reported that the governing board of OPEC, which discussed updating the long-term strategy of 2015, has gathered in Vienna and has approved the latest version. There have been some changes, as this time the negotiations have taken place without conflicts. Member States agreed that the organization should return to its role of managing the market, which actually declined in 2014, and become more proactive in anticipating changes in patterns of supply the demand.
The implementation of the real limits of production remains a challenge for the cartel, which on Friday after many hours of negotiations failed to reach a compromise amid objections of Iran. However, OPEC is still optimistic about reaching a final agreement at the meeting on November 30.
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