The OPEC members’ total crude oil output dropped by some 256,500 barrels per day to 31.382 mbpd in October compared to September, the organization has said in its latest monthly report.
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Saudi Arabia said it didn’t feel obliged to cut production, which is running close to a record. However, the situation was not helped by further strengthening in the dollar, as it rose to an eight months high.
The West Texas Intermediate for January delivery moved down $1.11 to settle at $39.97 a barrel on the New York Mercantile Exchange.
Saudi Arabian oil minister Ali al-Naimi said ahead of the meeting growing global demand could absorb an expected jump in Iranian production next year.
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”. There is no fear of that now, as Russian Federation will not be attending the meeting. “Oil is already there, and the market is oversupplied right now”, he added.
“In view of the aforementioned, and emphasising its commitment to ensuring a long-term stable and balanced oil market for both producers and consumers, the conference agreed that member countries should continue to closely monitor developments in the coming months”.
The decision effectively leaves it up to individual members how much crude to pump and was a strong signal of OPEC’s eroding ability to act as a group in efforts to influence supply, demand – and prices.
Oil prices fell sharply on Friday after it was reported that OPEC will raise its crude output ceiling by 1.5 million barrels a day.
But Moscow repeated this week it saw no chance of joint actions and Iran and Iraq on Friday showed no willingness to curb supply either.
“OPEC has never been more divided”, Fadel Gheit, an Oppenheimer analyst who has been closely covering the oil industry for 35 years, recently told CNNMoney.
Meanwhile, the General Director of OPEC Affairs in Iran’s Oil Ministry Mehdi Asali had announced the possibility of change in OPEC’s quota system by joining Indonesia at Friday’s meeting stressing that Iran would not vote for Saudi candidate in electing the new secretary general of OPEC.
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But the Saudis and their Gulf allies have been sticking to their strategy of defending market share – hoping that lower prices may ultimately drive higher cost producers such as United States shale firms out of the market.
