The producer group failed to agree on a new production quota, allowing member countries to continue pumping more than 31 million barrels per day of oil, further swelling a global glut that has depressed oil prices for over a year. “So the bounce in crude futures is likely to be tentative”.
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For its part, Iran has repeatedly said it would add 1 million barrels of oil to the market each day when economic penalties are lifted. Newsletter has been successfully subscribed.
OPEC’s secretary general Abdullah al-Badri said the cartel could not even agree on making routine projections for oil output next year because it could not predict how much oil Iran will add to the market as sanctions are withdrawn under a nuclear deal reached with world powers in July. The ceiling has been breached routinely by the group.
Iraq’s oil minister echoed those sentiments, asking after the meeting why OPEC members should accept a production cap if non-OPEC oil producers do not have one.
Saudi Arabia’s Minister of Petroleum and Mineral Resources Ali Ibrahim Naimi arrives for a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Friday, Dec. 4, 2015.
Failure to reduce the global oversupply could push oil prices $20 lower next year, Venezuelan Oil Minister Eulogio Del Pino warned before the OPEC meeting.
America’s oil drillers have idled more than half the country’s rigs in the past year as the world’s largest crude suppliers battle for market share.
Indonesia’s re-entry will “simply acknowledge the reclassification of Indonesian output from non-OPEC to OPEC production”, said Julian Jessop, analyst at Capital Economics research group.
But Moscow repeated this week it saw no chance of joint action, and Iran and Iraq yesterday also showed no willingness to curb supply.
He said that most companies bet on around $60 per barrel for oil prices, and as long as the prices remain well below that, the stress on the market will continue and in the upcoming weeks there will be an acceleration in layoffs if oil prices do not rebound.
“We’re in for another leg down”, said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion.
A final statement on the meeting was unusual in not mentioning any decision on production ceilings.
A recent surge in US production of shale oil has provided more competition for OPEC producers. By 1330 GMT, the ministerial meeting behind closed doors had been in progress for almost three hours.
The Iraqi oil minister said his country would further raise output next year after having steeply increased production in 2015. The group accounts for about a third of world oil output and does not include Russian Federation or the United States, which rival Saudi Arabia as the world’s biggest producers. US crude fell 2.2% to $40.18.
But Naimi said on Friday the report was “baseless”. There is global oversupply of 1.5mn to 2mn barrels a day, Iran’s Oil Minister Bijan Namdar Zanganeh said yesterday, before the ministers met.
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An attempt to nudge the cost of oil higher would have involved lowering output.
