The Organisation of Petroleum Exporting Countries (OPEC) has named Mohammed Al Sada to succeed Nigeria’s Ibe Kachikwu as the organisation’s conference president.
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The group established a record high production cap of 31.5 million barrels per day, which effectively endorsed current levels that were already in excess of the previous limit.
Cheap oil that could get even cheaper: That’s the challenge OPEC ministers face as they try to cut their losses at a time when supply is outstripping demand.
Oil tumbled below $40 a barrel earlier in the session after Reuters, citing unidentified OPEC sources, reported the cartel had agreed to raise the production ceiling to 31.5 milion barrels a day.
The group, however, has been producing almost a million more barrels than its ceiling for the past 16 months.
A report in newsletter Energy Intelligence suggested this week Saudi Arabia might be ready to fine-tune policies and could start pushing for a global deal to curb supply in order to avoid oil prices remaining low for longer.
The official ceiling is, however, largely symbolic as countries produce above it. OPEC pumped 32.1 million barrels a day in November, exceeding its target for an 18th month, according to a Bloomberg survey of companies and analysts.
“One of the reasons that we did not really mention an amount is because we are looking to negotiate with non-OPEC more and see how we can reach a collective effort that all of us should contribute to the market”, he said. “We are really anxious”.
The lack of consensus apparently allowed member countries to continue pumping oil at current rates into a glutted global market.
Given that need, some in the USA oil industry had held out hope that OEPC would actually lower its production at Friday’s meeting, an expectation that now seems misguided as Saudi Arabia, the group’s de facto leader, has aggressively pursued a strategy of high production in order to rattle US rivals.
He said the downward trend stems mainly from the impact of investment cutbacks and the drop in U.S. tight oil output, which has been declining since May 2015.
Stiff Iranian opposition to any attempt to rein in its oil production left the OPEC oil cartel divided and unable to agree on a plan of action at a meeting December 4.
“At the end of the day, every country has a sovereign right to bring its resources to the market place”.
Iran, which was once the second biggest oil producer in OPEC, has repeatedly stated that it is planning to increase its oil production by 500,000 barrels per day immediately after the sanctions are lifted, and by another 500,000 barrels per day within the following six months.
Instead, OPEC output may go up.
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That decision upended the oil the market and has seen prices slump by more than 40 per cent to levels last seen in the aftermath of the financial crisis.
