Oil in Global Economy Series: Venezuela calls for OPEC deal renegotiation

Venezuela is pushing for a renegotiation of the OPEC agreement that was first reached in last November with an aim to reduce production by 1.76 million barrels per day and was extended until March next year at a meeting in May. Despite the ambitious agreement, the deal has so far failed to lift the oil price substantially and has failed to reduce the global inventory overhang. On the day, the OPEC agreement was extended in May, the price of oil declined 3 percent and is still down (WTI) more than 7 percent when compared to the price prevailing before the extension. Brent, however, has been a better performer, which has increased its spread over WTI to $6 per barrel.

At an energy conference Kazakhstan, Venezuela oil minister Eulogio Del Pino said that despite the OPEC production cuts, the inventory has remained well above normal levels by as much as 300 million barrels. He expressed that Venezuela is looking for renegotiations of the OPEC agreement, which received endorsement from Russian energy minister Alexander Novak and Saudi oil minister Khalid al-Falih for further extension.