- Organization of Petroleum Exporting Countries (OPEC) always looms large for oil ETFs
- OPEC has hinted at its desire to limit production in face of the prolonged low oil environment
- Qatar, Russia, Saudi Arabia and Venezuela have been in discussions to hold output steady at January levels, but only if other producers followed suit
The Organization of Petroleum Exporting Countries (OPEC) always looms large for oil exchange traded products, such as the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures.
That thesis will be tested again this week with OPEC meeting. In fact, it is already being proven due to the reluctance of some OPEC members to significantly scale back production in an effort to support higher oil prices.
OPEC has hinted at its desire to limit production in face of the prolonged low oil environment. However, Iran, which has just recently re-entered the global oil market, is only just starting to ramp up production, potentially putting a damper on plans for a OPEC cut.
“Oil minister Bijan Zanganeh said Iran would only join discussions to cap output after its production reached four million barrels per day,” reports the BBC. “In February, Saudi Arabia struck a deal with Russia and other Opec nations to freeze oil output at January levels. But Iran wants production to hit pre-sanction levels before beginning talks.”
Qatar, Russia, Saudi Arabia and Venezuela have been in discussions to hold output steady at January levels, but only if other producers followed suit. Russia is the largest non-OPEC producer of oil and natural gas, though the country prefers higher prices even more so than Saudi Arabia. By some estimates, Iran is OPEC’s second-largest producer behind Saudi Arabia.