This comes despite complaints that the huge global surplus is damaging the industry.
Advertisement
Oil prices have more than halved over the past 18 months to a fraction of what most OPEC members need to balance their budgets. That involved raising the collective ceiling, excluding new member Indonesia, to 31.5mn bpd from the previous 30mn – effectively bringing it in line with real production numbers.
“We chose to postpone this decision to the next OPEC meeting until the picture becomes more clear for us to decide on a number”, OPEC Secretary-General Abdullah al-Badri said during the press conference in Vienna after members held discussions behind closed doors for more than seven hours.
OPEC looked unlikely to take steps to cut oil production to lift languishing prices at a meeting on Friday, potentially worsening one of the worst crude gluts in history. The S&P Energy index fell more than 1 percent, helping cap gains in the wider stock market. The cartel said it expected non-OPEC supplies to contract next year, with global demand forecast to rise by 1.3 million barrels per day.
So far it has not done that – it has put poorer OPEC members’ finances under huge pressure. “For OPEC, managing the impossible trinity of achieving higher market share, higher prices and higher demand through a nominal target which members continue to breach continues to be hard”.
Friday’s announcement sent ripples through wider markets and dented shares of USA energy drillers already suffering from low prices, but losses in oil futures were limited as prices hit key support levels around US$40 a barrel. “Others should do the same”, the Iraqi minister further said, referring to non-OPEC countries such as US.
Bullish wagers on U.S. crude oil from hedge funds and other big speculators fell to the lowest level in more than five years, data from the U.S. Commodity Futures Trading Commission (CFTC) showed.
Nigerias Minister of State for Petroleum Resources and President of the OPEC Conference Emmanuel Ibe Kachikwu, left, speaks to journalists prior to the start of a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Friday, Dec. 4, 2015.
“The volume maximizing strategy goes on for OPEC”, said Giovanni Staunovo, an analyst at UBS Group AG Zurich.
Iran’s oil minister has said the country aims to boost production by 1 million barrels a day nearly immediately, although independent analysts say a figure of half that is more realistic in the next year. Saudi Arabia has been content to keep production up, a move which has squeezed producers in the United States struggling to maintain profits in the face of low prices.
Advertisement
Noting there are at least three shooting wars within about 1,000 miles (1,600 kilometers) of about 30 percent of the world’s oil production in the Middle East, he writes: “Compared to today, a couple of years ago seems like a pretty calm time”. The pressure isn’t exclusively on Saudi for output cuts, he said, adding that Iran’s return will do “nothing” to the market as demand for oil will strengthen next year.
