Geopolitical tension has always had an impact but over the last year it has built up an immunity to it. The recent shooting down of the Russian fighter plane by Turkey caused a fluctuation in the price for a day or two but now with the OPEC basket down below $40 and falling, such issues have moved on and will now focus on what OPEC said at this meeting to justify their current policy of letting the market find its own level.
For much of the world, the focus is on Syria and the defeat of ISIS. A loose coalition is emerging to tackle ISIS while at the same time attempting to decide upon a strategy for Syria. One hopes this will recognize the needs of all inhabitants.
The current leaders now appear to be Russia and Iran, two countries at opposite sides of the spectrum to Western nations and Europe – Russia for its stance over Crimea and Iran for its ongoing nuclear aspirations. Yet some synergy has emerged from around COP21 as it so happens that all world leaders want to be seen there, making it an unofficial forum for other issues.
We also need to be mindful of the ongoing and sometimes mindless dialogue over Middle East Peace which has been running for many years and particularly since 1948. Sympathy and support for Israel is waning certainly across Europe and a serious initiative needs to be found but, it is just one of many issues simmering below the surface.
OPEC is not immune to any of this, Iraq and Iran are both embroiled in the ISIS campaign while Syrian oil is funding ISIS. Syria is not a member of OPEC but can attend OPEC Meetings as an observer, like Russia. Closer to home, in Yemen, Saudi is bombing the Houthis who in turn are supported by Iran – not a direct confrontation between two leading OPEC members but certainly a serious confrontation.
Within OPEC, Iraq is ramping up production with ambitions to soar towards 10mbpd, while Iran is waiting for the opportunity to release another 300-500,000 bpd into the market and then increase this to over 1mbpd within twelve months. Indonesia is returning with around 900,000 bpd which will simply move from nonOPEC into OPEC.
These are all quota issues that OPEC will have to deal with and, in theory, as one increases others will have to cut to accommodate the other, to balance the overall output. Nigeria is restructuring and attempting to stamp out corruption and smuggling of its oil wealth and in time will have more oil to input.
Looking back over the last year, there have been key events and statistics to follow and I have included some of the latter in the table below.
