OPEC meeting as indication of Azerbaijans role in oil and energy market

According to MP, a trust environment has been created between oil producers and exporting countries at Azerbaijan's initiative 


The 13th meeting of the Joint Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Ministerial Monitoring Committee (JMMC) was held in Baku on March 18. The event featured a presentation on the pace of oil market development, and the report of the Joint Technical Commission (JTC) on production figures for February was read out. Also, JTC's recommendations for market balancing and the level of compliance with the commitment to reduce oil production were reviewed.

In such a period, meeting of the producing countries is of great importance for the parties. The meetings held in OPEC + format have played a relatively more effective role than the previous ones. The initiative to hold the meetings in such a format was put forward by President Ilham Aliyev at the Davos Economic Forum in 2016. Making an initiative to hold a meeting of oil producing countries in the OPEC + format, the head of state stressed the importance of a joint meeting of the OPEC member countries with the countries that are engaged in oil production, but not represented in this organization, production and export of energy resources, as well as discussion of oil prices in the world market and other issues in a unified format. At that time, the Azerbaijani president also clarified the issues of stabilization of the oil price and keeping it around $ 70. All this provides a basis to say that President Ilham Aliyev has had a great role in holding the meeting in Baku in the OPEC + format, as well as keeping the oil price in the world market at $ 60-70. Effective proposals and initiatives of the head of state have led to the stabilization of the world energy market.

According to economist, MP Tahir Mirkishili, oil is a product that regulates its price. "It is of great importance for both producer and consumer countries. Therefore, finding a common point for both sides is one of the main challenges facing countries that export oil. The global economic crisis in 2008 seriously diminished the demand for oil. As a result, there has been a sharp decline in oil prices since 2014. Even though OPEC countries agreed to avoid price cuts during that period, these meetings led to further price drops. It became clear that it is impossible to prevent price cuts within the existing format. Under such conditions, the idea voiced by President Ilham Aliyev at the Davos Economic Forum in 2016 has led to further expansion of the format. In his speech at the forum, he said that the format should be expanded and emphasized the importance of the OPEC + format in terms of co-ordination between OPEC and non-OPEC countries. Thus, based on President Ilham Aliyev’s ideas, the OPEC+ format was established. This led to stabilization in the oil markets as a whole. The decision to reduce the daily oil production by 1.8 million barrels is of paramount importance to OPEC and non-OPEC countries. This agreement led to a fair price of oil. In 2016, President Ilham Aliyev noted that the price of oil at 60-70 dollars would be fair. The initiative of the head of state gave its results. This is an indication of Azerbaijan's role in world oil and energy market. According to the Azerbaijani president's proposal, the next OPEC meeting is currently being held in Baku. I think that Azerbaijan’s role in this direction is very positive. This is highly appreciated by everyone. On the initiative of Azerbaijan, a trust atmosphere has been established between oil producers and exporting countries today. This environment is the only reason for the stability in the oil market," the MP noted.

Economic expert Rashad Hasanov said Azerbaijan is an oil producing country and is one of the countries that are directly involved in the OPEC + format held since 2016. "The fact that this event is held in Azerbaijan is actually commendable. I believe that the issues discussed at this forum will have an impact on the strategic decisions of OPEC and non-OPEC countries on oil prices. It is likely that the strategy of OPEC on oil prices will be further discussed. These discussions will be aimed at expanding the OPEC + format and increasing the impact on the global oil market. At the same time, the trends observed in world markets will be discussed widely at this meeting. Some details of the agreement to be adopted in May are being discussed in Baku. Most oil countries are represented at the event, which gives the reason to say that the decision taken at the meeting is quite significant and will be reflected in the policies of the oil producing countries in the coming years. This meeting once again proves that the OPEC+ format is relatively more durable. The participating countries are also interested in maintaining this format. The meeting also boosts the ability to control prices in oil markets. Adopting certain agreements at this meeting raises hopes for their provision, and gives an opportunity to predict a more stable future for oil markets," he noted.

According to the expert, Azerbaijan is interested in selling its oil at an optimal price. "Taking this context, this meeting is of great importance to us. In general, the main topic discussed at all OPEC meetings is to determine the range of oil production and the price of oil. Accordingly, the market's future participation level is determined. As you know, one of the major oil producing countries is in the US, which has rapidly increased its oil production over the past few years. According to the International Energy Agency (IEA), an important part of declining production within the framework of the agreement on world oil market regulation by OPEC in 2019 is compensated against the background of increasing oil production in the US. Therefore, the optimal price range is important for OPEC. Some think that the maximum price for oil is more favorable for participating countries. But in fact it is not. Several parameters are taken into account when determining the price range. One of the key parameters is how much US investments in shale oil will increase. The rise in oil prices on the world markets is also a key factor in promoting this process. Thus, the rising prices affect the global economy. Highly-sold oil worsens world economy growth rates. This, in turn, reduces the aggregate demand. An increase in oil prices also increases the cost of production. This dramatically increases the prices for the products imported by oil producing countries. Therefore, these issues require a comprehensive approach. Such decisions are being considered when making decisions at the meeting. At present, the optimal oil price is between $ 60-70. However, this interval may be changed in the future," said Hasanov.

Shabnam Mehdizade

19.03.2019 16:22 / Hits: 174 / Print
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