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OPEC chief calls for cooperation to prevent price decline

As oil price retrace back Friday's 10% gains for the past two days and dropped below $30/barrel again, OPEC's Secretary General Abdalla El-Badri, called for cooperation among OPEC and non-OPEC producers. North American benchmark, West Texas Intermediate (WTI) is down -2.7% again today, trading at 429.5/barrel. With today's decline, WTI is down more than 20% this year.

Political rivalry between Saudi Arabia and Iran has left OPEC ceiling less after last meeting held last year. Moreover Russia has so far been reluctant in cutting oil price.

Mr. Badri, called for both large OPEC and non-OPEC producers to come together in balancing the market. "It is crucial that all major producers sit down to come up with a solution to this. The market needs to see inventories come down to levels that allow prices to recover and investments to return." He also said, it would be crucial from consumers' point of view too - "This is not only crucial for producers, but consumers too. The world desires more oil, and this means more investment."

As oil price is declining steadily, countries and companies are showing willingness to cooperate to stem oil's decline. One of Russia's biggest oil companies has said it is not opposed to joining the cartel in production cut. Leonid Fedun, vice-president of Lukoil, Russia's second-largest oil producer, said he would not oppose joining output cuts if they received political backing in Moscow. On the other hand, Saudi Arabia has said it will consider cutting production if joined by the largest producers outside OPEC, like Russia.

However, with Iran's production set to rise, there are considerable doubts, whether Saudi Arabia would be willing to cooperate amid budget crunch.

With lack of cooperation in global level, supply glut likely to persist in the market and oil would have little to gain from.

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