OPEC at its last meeting in December in Oatar with other producers like Russian Federation failed to agree on an output ceiling.
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One thing which could perhaps smooth the waters was the appointment on Thursday of Nigeria’s Mohammed Barkindo as new OPEC secretary general, replacing Abdalla El-Badri of Libya. They “confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers”, said their closing statement.
Opec de facto leader Saudi Arabia had shown willingness to mend divisions earlier yesterday, with cash-strapped members demanding a new group ceiling.
New Saudi Energy Minister Khalid al-Falih was the first OPEC minister to arrive in Vienna this week, signalling he takes the organisation seriously despite fears among fellow members that Riyadh is no longer keen to have OPEC set output.
Although OPEC regularly ignores its own output targets and there was no suggestion anyone would cut production Thursday, even a token gesture could have helped to boost prices.
“The Conference considered Gabon’s request to rejoin the Organization, and chose to approve its admission with effect from 1st July 2016”, OPEC secretariat said.
But the Saudi push to form a united front was initially blocked by Iran at the meeting Thursday, although that country reportedly adopted a more conciliatory stance than in the past, Bloomberg said. Iran had, however, rejected any cap on production as it restores output following the removal of sanctions in January. “The market is heading towards rebalancing”, Qatari Energy Minister, Mohammed Al-Sada, told reporters in Moscow. He insisted Tehran deserved a quota – based on historic output levels – of 14.5 percent of OPEC’s overall production.
Global oil demand is expected to rise by 1.2 million barrels per day this year, down from a 1.5 million-barrel-per-day increase in 2015, OPEC projected.
Iran is supportive of such a trend adopted by the OPEC, the minister said. On Friday, militants in the restive Niger Delta region that produces more than half of Nigeria’s oil claimed three new attacks on oil infrastructure, promising to bring the country’s oil production to “zero”.
“Iran’s been consistent in their actions, so the market is pretty much priced-in here”, he added.
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Bob Minter, analyst at Aberdeen Asset Management Investment, said: “This should have been an easy meeting to re-establish Opec relevance, but they missed the opportunity”.
