Bringing the ceiling in line with real production could help bridge the gap in views between OPEC and non OPEC. That leaves OPEC output steady at 30 million barrels a day, with actual daily production closer to 31.5 million barrels. “The Saudis clearly feel that their strategy is working and remain committed to it, despite the protests of many other OPEC members”, said Seth Kleinman, head of energy research at Citigroup.
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Despite many member countries plan to lower the production ceiling, Saudi Arabia has demanded reduction in Russia’s production as a prerequisite for decreasing its production, a request which Russian Federation would not concur with.
In a surprise, OPEC failed to reach an official decision Friday on how much oil to produce.
Iraqi oil minister Adel Abdel Mahdi said his country would further raise output next year after having steeply increased production in 2015.
Additionally, oil product supplies are also building as warmer-than-usual weather in the United States northeast, a major market for heating oil, limits demand.
The dollar rose, which would ordinarily depress oil prices as this strength can encourage non-US investors in crude to sell their holdings in exchange for a higher profit in their own currency.
“The bigger question is about the threat which the organization is facing now, because the probabilities are skewed that its members will start doing what they think it is best for them and as a result we could see the price war becoming even more intense”, Aslam said, in a note.
Ultimately, OPEC leader Saudi Arabia decided not to answer desperate pleas from less affluent members like Nigeria and Venezuela to cut production.
Arriving for Friday’s meeting, Iranian oil minister Bijan Namdar Zanganeh said Iran is ready to discuss a ceiling for its production – but only after his country makes a “full return to the market”.
OPEC’s Friday statement “implies to me that they’re comfortable with their current production”, said Rob Haworth, senior investment strategist at US Bank Wealth Management, which oversees $US130 billion.
Paris // Opec will not risk its market share and further disruption to oil markets, an analyst said after it maintained output despite a 35 per cent slump in crude prices this year. Sanctions on Iranian oil sales are about to end, Indonesia is about to be reinstated as a member and Iraq’s production is coming back strongly after years of conflict. OPEC has pumped more than its previous collective target of 30 MMbopd the past 18 months, data compiled by Bloomberg show.
“This decision reflects the consensus going into the meeting of Opec’s policy for prices needing to find a floor to deter new non-Opec supply projects”, Gareth Lewis-Davies, London-based energy strategist at BNP Paribas, said by phone.
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America’s oil drillers have idled more than half the country’s rigs in the past year as the world’s largest crude suppliers battle for market share.
