Nigerian Oil Minister and President of the Organization of Petroleum Exporting Countries Emmanuel Ibe Kachikwu told ministers gathered in Vienna oil demand will grow next year by 1.3 million barrels per day, down from the expected full-year demand growth for 2015 of 1.5 million bpd.
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While OPEC previously had a production ceiling of 30 million barrels a day, members have been producing closer to 31.5 million barrels a day, according to market estimates.
Oil prices dropped Friday as the Organization of the Petroleum Exporting Countries (OPEC) ended a meeting without any agreement to reduce the production. Internationally traded Brent was down 47 cents, or 1.1 percent, at $43.37 at 11:44 a.m. EDT (1644 GMT), having fallen earlier this week to a low of $42.43, within cents of August’s 6½-year trough.
Oil futures fell Friday after OPEC said it wouldn’t cut output and plans to revisit production levels later, continuing a global oil glut that started previous year.
Iaq’s oil minister, Adel Abdel Mahdi, has indicated his country intends to increase output levels in 2016, as OPEC fights to maintain its market share and drive competitors out of the market.
WTI crude oil prices plummeted below $40 per barrel on Friday as OPEC has agreed to stick to its policy of flooding the global market with oil in an attempt to maintain and re-gain market share. Still, the move wasn’t entirely unexpected, and Friday’s 2.4 percent drop in US crude prices may soon abate, analysts said.
“Our interest is to keep prices from rising too high and from falling too low”, said Widhyawan Prawiraatmadja, Indonesia’s new Opec governor.
Iran once pumped around four million barrels a day and is now down to about half that.
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.
“The market did not take the announcement out of OPEC very well today as OPEC appears to really be in disarray among its members and they took the path of least resistance, which was to do nothing and wait to see if things get better”, said Andy Lipow of Lipow Oil Associates.
“Now the Viennese OPEC family gathering is over, the music has stopped and they’re sweeping up, but nothing has changed – the oil production remains unchanged, the oil production quota remains divorced from real-world oil production, and the slightly dysfunctional OPEC family – like most families – has gone its separate ways”, said Christopher Wheaton, energy fund manager and analyst at Allianz Global Investors.
The crash in oil prices has OPEC so divided that the only thing the cartel can agree on is not to agree at all. Low prices probably mean cutbacks in government services, which in turn could lead to more widespread unrest.
Poorer OPEC members had put pressure on Saudi Arabia and its allies to cut output.
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Western sanctions against Iran’s oil industry are set to be lifted next year, and Tehran has vowed to reach presanction production levels.
