Click on image above or this link to view Hedgeye TV interview with former OPEC President and Algerian Energy Minister Chakib Khelil. The interview was taped Tuesday afternoon in Hedgeye’s Washington office.
TOPICS:
- How does an OPEC minister prepare for a meeting and key decisions on production
- Current view of oil market
- Is a rollover of cuts really “in the bag” as Saudi minister said & will Iran cause trouble at the meeting next week?
- Will Russia agree to extension and comply with cut commitment?
- Libya political situation and potential for supply disruption
- How the “surge of US shale production” impacts OPEC decisions
- Saudi oil policy for 2H 2019
As OPEC prepares for its meeting next week in Vienna, former OPEC President and Algerian energy minister Chakib Khelil said Iran and Russia will be crosscurrents in the ministers’ discussions, in an exclusive interview with Hedgeye TV.
Khelil sat down for a 40-minute interview with Hedgeye TV in our Washington office on Tuesday afternoon.
Khelil said it will also be difficult for OPEC to ignore the current geopolitical risk in the region. “There is an unusual and complex situation dominated by geopolitics mainly by what is going on in the Gulf because the Strait of Hormuz is very critical for transport of 20 percent of oil supply and 30 percent of LNG supply,” Khelil said.
In addition, he said US sanctions on Iran has caused “a major supply disruption” and “reduced Iran’s production by 1.2 million barrels per day (b/d).”
But Khelil said that because of the “surge of non-OPEC supply mainly from US shale, we can easily see the call on OPEC oil is going to continue to decline,” and the “oversupply dampens the risks of geopolitics” in the market.
Khelil thinks the OPEC+ group has few options at next week’s meeting. “Not rolling over (the cuts) is not an option for OPEC. For Saudi Arabia and other members of OPEC, they need a rollover because they want to maintain prices in a level more acceptable than $65 (per barrel for Brent).”
Khelil’s comments are in line with our view expressed in a note earlier this week that we think it is very likely that OPEC+ will extend the production cuts that expire on June 30. It was announced earlier this month that President Putin will visit Saudi Arabia in October, and we believe the trip would not have been announced unless Russia had agreed in principle on supporting an extension.
NOTE: Hedgeye's senior energy policy analyst will be in Vienna for the OPEC meeting on July 1 and 2 and will provide client note updates starting on Sunday so be sure to check email inboxes. Also, please contact us if you would like to arrange a call with Joe from Vienna by replying to this email or contacting your Hedgeye sales team member.
