Haitham al-Ghais, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), speaking at the Asia Energy Summit on June 26, 2023.
Bloomberg | Bloomberg | Getty Images
The secretary general of the Organization of the Petroleum Exporting Countries has signaled that the influential producer alliance is actively open to recruiting new members.
Asked if he was attempting to expand the OPEC coalition, the organization’s secretary general, Haitham al-Ghais, told reporters on Wednesday: “I’m, yes.”
The group currently has 13 members, mainly from the Middle East, North and West Africa and South America. At stake for oil producer organizations is the struggle to reconcile the prospects of limited oil supply in the second half of the yr, current macroeconomic concerns and fears about inflation. OPEC members coordinate the amount of oil produced to influence prices.
Ecuador left the group in 2020 on account of political circumstances, but was invited to rejoin OPEC in May, in keeping with a letter from al-Ghais provided by the Ecuadorian Ministry of Energy.
“The organization considers it a top priority to rejoin Ecuador into the OPEC family,” the letter said. The Ecuadorian ministry didn’t disclose its response.
Al-Ghais wouldn’t be drawn into revealing the names of potential new members. Nonetheless, he mentioned recent visits to oil-producing countries, including allies who’re currently pursuing a joint production strategy with OPEC countries, in the OPEC+ group.
“I have been to Malaysia, I have been to Brunei,” he said, emphasizing that he was not necessarily inviting those countries to hitch the organization. “I have been to Azerbaijan, I have been to Mexico.”
There had been earlier speculation about Guyana’s potential membership OPEC country in late June that, while the South American country is “an emerging player in the international oil market with significant potential”, he had not been invited to hitch.
Asked about the requirements to change into a member of OPEC, al-Ghais said: “They should be a network [oil] exporter, a big one, will need to have similar goals as OPEC. All this is very clearly described in our statute. And I believe many of the countries I just listed actually fit that profile. So… work in progress.”
Unanimity
The secretary-general addressed journalists after the OPEC seminar conference in Vienna, where energy and oil ministers met side lines.
No new policies were announced, but ministers praised the additional oil production cuts by OPEC+ members Saudi Arabia, Russia and Algeria.
On Monday, Saudi Arabia announced it could extend its voluntary cut by 1 million barrels a day, initially scheduled for July to August, while Moscow said it could cut exports by 500,000 barrels a day next month. Algeria also said it could cut production by 20,000 barrels a day in August.
All three countries and a number of other other OPEC+ members declared a separate set of production cuts in April totaling greater than 1.6 million barrels a day, which were prolonged until the end of 2024.
Al-Ghais stressed that the voluntary reductions enacted by some OPEC+ countries don’t suggest divisions in the political opinions of coalition members.
“When people can sit down and undergo an agreement that covers all the way, with a transparent vision, all the strategy to 2025, I believe that’s an indication of unanimity,” he said.
“These are sovereign decisions of the country. They’re extra. We appreciate them. … This by no means suggests that there is fragmentation.”
Chatting with CNBC’s Dan Murphy on Thursday, al-Ghais highlighted the lingering uncertainty that continues to forged a deep shadow over the oil price landscape.
“I’d say there is quite a bit of ambiguity about some of the macroeconomic picture. [You] you speak about banking problems in the US. You speak about recession fears, you speak about the ongoing fight against inflation. And I all the time wish to remind people that we’re not out of the woods in the case of Covid,” he said.
“The first half of the yr didn’t really go as expected not only by OPEC, I’d say, but by most. So we predict this might materialize in the second half of the yr, with China opening up, perhaps at a more rigorous pace than before, [with] allow us to hope to control the economic conditions in the European and American systems.”
OPEC officials in recent months have pointed to a disconnect between underlying demand and provide aspects and global oil prices, which have been absorbing aftershocks from banking and economic turmoil since the starting of the yr.
Thursday, Brent crude oil futures expiring in September, they rose 12 cents a barrel from the previous deal, reaching $76.77 a barrel at 12:43 p.m. London time.
Deal with investments
Echoing comments from other OPEC officials, al-Ghais also advocates simultaneous joint investments in fossil fuel and renewable energy projects to avoid energy supply deficits. Despite what he sees as global underinvestment in hydrocarbons, he said the OPEC alliance could still reply to any potential supply crisis.
“Part of the decision to chop production is also good since it gives us more spare capability, and OPEC has all the time managed to step up in any kind of world shock,” al-Ghais said.
“I’d say spare capability is limited. … And our countries are investing. Once I speak about underinvestment, most, if not all, of our countries are investing. … Nevertheless it’s a world responsibility. OPEC cannot take it by itself. We’ve to make everyone raise the bar.
Suhail al-Mazrouei, UAE Minister of Energy, also stressed the emphasis on investment and accessibility.
“It isn’t the price that’s vital, it’s the level of investment that comes into the market to balance the long-term or medium-term supply outlook,” he told CNBC’s Murphy on Wednesday. “If there’s anything that worries me, it’s the medium to long-term supply that worries me. Not demand.
The International Energy Agency predicted an intense collapse in supply in May, noting “a tightening of the market balance, which we expect in the second half of the yr, when demand is expected to exceed supply by almost 2 mb/d.”