According to the OPEC’s monthly oil market report in November, the total output level stood 31.4mbpd in October.
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An attempt to nudge the cost of oil higher would have involved lowering output, thereby reducing supply and driving demand higher. The desert kingdom, the group’s biggest producer and architect of the current policy, has steadfastly opposed a cut in output unless countries outside the group cooperate.
For Saudi Arabia, low oil prices and the prospects of big fiscal deficits have already prompted officials to float the idea of potentially unpopular reforms, including introducing a value added tax and cutting energy subsidies.
But the Saudis appear in no mood to act unilaterally.
Russian Federation receives half its revenue from oil and gas sales and sees Saudi Arabia as a major competitor.
On the New York Mercantile Exchange, WTI crude for January delivery traded between $39.61 and $41.98 a barrel before settling at $39.98, down 1.08 or 2.64% on the session. Brent futures climbed 1.5 percent at $44.50 as of 10:40 a.m.in London on Friday. WTI was down 3.0 percent in early trading following the news.
The dollar has posed an additional headwind for oil prices, with the WSJ Dollar Index up about 8% on the year.
“We are looking for stability in the market”, said Venezuelan minister Eulogio Del Pino. “The Saudis didn’t blink”.
“As far as supply is concerned, non-OPEC countries would continue to see significant reduced production growth as compared to past years”. It comes after Russian Federation has been working its way into Saudi Arabia’s once-undisputed market in Asia over the past decade.
According to secondary sources, currently, OPEC countries are producing 31.3 million barrels of crude per day which marks 1.3 million barrels more than the ceiling set for the organization. Before the sanctions, Iran was OPEC’s second-largest oil producer.
OPEC said it would next meet on June 2; however it was possible that an extraordinary meeting could take place before then.
OPEC members failed to agree on an oil production ceiling on Friday at a meeting that ended in acrimony, after Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions.
“The pressure will build on OPEC and oil prices”.
OPEC abandoned production quotas for individual members several years ago and most members have been producing as much as they want.
Failure to reduce the global oversupply could push oil prices $20 lower next year, Venezuelan Oil Minister Eulogio Del Pino warned before the OPEC meeting.
“Dialogue and collaboration with consumers, non-OPEC producers, oil companies and investors are essential in reaching our common goal of a more orderly oil market”.
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“The only bright spot is the USA, where it looks like production will drop”, Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami, said by phone.
