The majority of OPEC members would agree to a reduction in crude production at Friday’s meeting, with the exception of Saudi Arabia and the Persian Gulf Arab countries, Shana reported, citing Mehdi Asali, director general of OPEC and energy forums at the Iranian Ministry of Petroleum. The global surplus is worsening after USA government data showed crude stockpiles in the world’s biggest oil consumer expanded for a 10th week, keeping inventories more than 120 million barrels above the five-year seasonal average.
Advertisement
In London, Brent crude was going for $43.37 a barrel, up more than 2 percent since the day before.
OPEC remains divided over how to stabilize the oil market and needs a consensus among all members before it can change its output target.
US crude oil prices extended gains on Friday, buoyed by a weaker dollar, ahead a closely watched OPEC meeting that is unlikely to alter the group’s policy of maintaining high output.
And Iran on Thursday said it would not bow to pressure whereby it avoids increasing its production following the lifting of sanctions that had been imposed due to its disputed nuclear programme.
OPEC produced 32.1 MMbpd in November 2015.
OPEC sources and analysts said the Saudi proposal would be hard to agree as Iraq is struggling to balance its budget even despite soaring output and Iran has long argued its market share was stolen by rivals during the years of sanctions. The contract slid $1.91 to $42.49 on Wednesday, the lowest close since March 2009.
West Texas Intermediate for January delivery rose 50 cents, or 1.3 percent, to $40.44 a barrel on the New York Mercantile Exchange.
Within Opec, the Saudis would want Iraq to freeze production levels at current volumes of about 4 million bpd, while Iran, which expects western export sanctions to be lifted early next year, would also need to participate in the effort.
Iran, which has said it will proceed with its output increase plans regardless of whether oil prices fall further, has written to OPEC calling on the group to consider these additional barrels when making decisions on output policy. “It is our right and anyone can not limit us to do it”, he reportedly said in Vienna. Despite the misgivings of some members, OPEC agreed then to maintain the 30 million b/d output ceiling that had been in place since January 2012.
Russian Energy Minister Alexander Novak has that a production cut is not viable for the country and it’s not planning on taking part in the OPEC meeting.
“Iran has made it very clear they feel perfectly entitled to come back to market with as much oil as they can”, said Chris Weafer, senior analyst and founding partner of Macro-Advisory.
Advertisement
Markets were shaken by the announcement that the United States has increased its production to 489 million.
