Poorer OPEC members had put pressure on Saudi Arabia and its allies to cut output.
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Near-record volumes have sent oil prices tumbling and OPEC seems to have done nothing to tackle overproduction. West Texas Intermediate, the US benchmark price for crude oil, lost 3 percent to open the day at $39.78 per barrel, falling below the $40 mark for the second time this week.
In the last few weeks, investors have run up big bearish bets, or short positions, betting on a fall in the price of crude oil, which could be rapidly unwound if OPEC were to give any signal that it might adjust its stance on supply.
Meanwhile, Saudi Arabia and Persian Gulf Arab members have defied calls to lower oil production, while other OPEC nations, notably Venezuela, Ecuador and Algeria, favor a cut to help boost prices, and in turn their badly-hit revenues.
“The current indecisive approach of OPEC in Vienna has shown that the oil cartel is not a single block”, Cyril Widdershoven, a senior vice president at MEA Risks LLC in the U.S, said.
Saudi Arabian oil minister Ali al-Naimi said on Friday that growing global demand could absorb an expected jump in Iranian production next year.
Houston’s Fuel Fix reports that “Indonesia, which produced an estimated 789,000 barrels a day previous year and has 3.7 billion barrels in reserve, originally joined OPEC in 1962 and left the group in 2009”.
Crude oil prices made marginal gains in early trade Friday on a weaker greenback and market chatter that the Organization of the Petroleum Exporting Countries will consider a production cut at its meeting later in the day to lessen a supply overhang.
OPEC’s Secretary General Abdullah al-Badri said the group was unable to agree on a production ceiling, in part because it was unclear how much oil Iran would export next year when sanctions are lifted.
A final statement on the meeting was unusual in not mentioning any decision on production ceilings. The market is oversupplied by as much as 2 million barrels a day, Zanganeh said.
Here’s what the cartel didn’t say: OPEC production has risen from 30 million barrels a day to a de facto 31.5 million barrels, and when Iran is freed from sanctions the world should expect that number to rise further.
Tim Rezvan, an oil analyst with Sterne Agee CRT, said OPEC’s decision heralds a “bearish near-term event” for the US oil industry.
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The cartel’s official quota is 30mbpd, but the cartel’s total or actual output varies, since the production volume of its members change every month.
