The world is dependent on oil, OPEC’s members own most of what’s left of it and together they account for one third of oil production. It was pumping more than 4 million barrels a day last month and was responsible for last month’s biggest monthly rise in output among all OPEC countries.
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OPEC’s production could increase next year if Iran returns to the global oil market after the lifting of the worldwide sanctions.
The Opec is committed to production of about 31.5mn barrels a day, Nigeria’s Minister of State for Petroleum Resources and Opec president Emmanuel Ibe Kachikwu said after the meeting. That was unlikely to happen.
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. U.S. storage tanks are full, and stocks are also much higher than average in most other developed nations.
The production outlook appears to be a victory for Saudi Arabia which has been under pressure from OPEC’s poorer members to cut output and help bolster prices.
The Organization of the Petroleum Exporting Countries on Friday decided against cutting its oil output despite sliding prices and higher production expected from Iran.
With OPEC countries producing an estimated 32 million barrels per day, above the group’s agreed 30 million barrel target, and with Iran expected to resume substantial exports next year, hopes were that the group would take steps to lower supplies.
Badri tried to lessen the embarrassment of OPEC’s divisions by saying the cartel’s influence on market prices is as strong as ever – an assertion that prompted an outburst of laughter from reporters and analysts in the conference room, Reuters reported. “So we chose to postpone the decision until the next Opec meeting, when the picture will be clearer”. “And also the production changes from time to time”, he said.
OPEC is likely referring specifically to Iraq, Iran and non-OPEC member Russian Federation, which has been a major contributor to the glut.
Saudi Arabia’s oil minister Ali al-Naimi (C) speaks to journalists as he attend the OPEC meeting …
A final communique following the meeting made no reference to the idea of a production quota cut – from the cumulative 30 million barrels a day – in a bid to boost prices. OPEC requires consensus among members to alter its output ceiling.
“We did not really mention the amount – it’s 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”, OPEC’s Secretary General Abdullah al-Badri told a news conference. But Saudi Arabia has been content to keep production up, which has squeezed profits for producers in non-OPEC countries, including the United States.
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Brent crude closed on Wednesday at $42.49 a barrel, the lowest since 2009, when demand slumped during the global financial crisis.
