Wednesday 22 January 2020 12:47 pm

Brazil to begin discussions on joining oil cartel Opec

Brazil is set to begin discussions on joining oil producer cartel Opec, its energy minister announced today.

Bento Albuquerque said that talks would begin during a visit to Saudi Arabia, the group’s de facto leader, in July this year.

He hastened to add that Brazil would not join the group this year.

Brazilian president Jair Bolsonaro raised the prospect of joining the cartel in October, in a move that was met with considerable scepticism from his national oil industry.

If it joined Opec, Brazil would become the group’s third-largest producer by current volume, but would be faced with the problem of ongoing curbs to output.

At a time when the industry is expanding rapidly in Brazil, such a decision would have a direct effect on the future development of the sector nationally.

When asked if his country would cap output in line with Opec terms, Albuquerque said: “It is a matter of negotiations, we have to start discussions.”

At its biannual meeting in Vienna in December, the cartel agreed to increase production cuts by 500,000 barrels a day, taking the total supply curb to 1.7m barrels.

In addition Saudi Arabia pledged a voluntary extra 400,000 barrels per day, taking total production cuts to 2.1m.

The cuts were considered necessary in order to sustain oil prices, which remain at low levels due to an oversupplied market.

Prices spiked to their highest in four months in January when the US assassinated Iranian military leader Qassem Soleimani in Baghdad, but have subsequently settled as tensions dissipated.

Albuquerque said that Brazil’s output looked set to rise in 2020, with estimates of 3.5m barrels a day, an increase on last year’s 3.1m.

He added that the country would continue to auction the rights to its massive oil deposits, with three further licenses up for grabs in 2020.