According to the OPEC’s monthly oil market report in November, the total output level stood 31.4mbpd in October.
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OPEC had been widely expected to stick with its year-old policy, despite pressure from poorer members of the cartel for a cut in output to prop up the price of oil.
But as long as investors remain willing to invest in oil companies that are operating above their “cash cost” level, then it won’t be financial stresses on the company level that allow markets to clear, but stresses at the storage level that might be needed for the market to balance.
But the Saudis appear in no mood to act unilaterally. “Everyone does whatever they want”. The S&P Energy index.SPNY fell on Friday, helping cap gains in the wider stock market.
Brent crude oil futures fell 58 cents to $43.26 a barrel by 12:11 p.m. ET after rising in early trade. It’s down 3.3% this week.
“One of the reasons that we did not really mention an amount is because we are looking to negotiate with non-OPEC more and see how we can reach a collective effort that all of us should contribute to the market”, he said. “The Saudis didn’t blink”.
Iran’s claim that it could increase production by 500,000 bpd in three months with a further 500,000 bpd to follow within a year is treated with some scepticism in view of the lack of investment in the infrastructure and the additional difficulty of marketing crude oil in a glutted market that has seen supply exceed demand by more than 1m bpd throughout 2015. According to the U.S. Energy Information Administration, American oil producers produced an average of about 9.3 million barrels of crude oil per day in June, the latest data immediately available, adding to the global oversupply.
The cartel is now pumping out around 32 million barrels daily – a figure that is set to rise in coming months as Iran looks to pump out more crude and after Indonesia’s return to the organization was confirmed Friday. “In fact, in 2016, we anticipate a contraction in non-OPEC oil supply”, he said. “The higher quota reflects the realpolitik of accommodating Iran”.
He said the conference was determined to enhance market stability to the benefit both consumers and producers and contribute to global economic growth. “The burden to adjust supply remains on non-OPEC producers”.
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. By 1330 GMT, the ministerial meeting behind closed doors had been in progress for almost three hours.
Badri tried to lessen the embarrassment by saying Opec was as strong as ever, only to hear an outburst of laughter from reporters and analysts in the conference room.
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.
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The upshot is the meeting will likely decide to maintain the official OPEC level of 30 million barrels a day, urge members to cut back on overproduction and hope for better times next year.
