And so while Goldman is forecasting oil prices over the next few months to be near $40 a barrel, or roughly where they are trading today, there could be another 50% to fall as continuing OPEC production pushes producers towards the absolute lowest level they can conceivably manage. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
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“We can not put a number now because Iran is coming, we don’t know when Iran will come, and we will have to accommodate Iran one way or the other”, said OPEC Secretary General Abdullah el-Badri.
Saudi Arabia is willing to cooperate with anyone to re-balance the market, Oil Minister Ali al-Naimi told reporters on Friday after OPEC ministers arrived to discuss policy.
Non-Opec supply is expected to decrease next year, while global demand is anticipated to expand by 1.3 million barrels per day, according to Opec. “OPEC has also held bilateral dialogues with Russian Federation and China this year, and later this month the OPEC-India Energy Dialogue would have its first meeting”.
Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Saudi Arabia didn’t propose a cut at the meeting on Thursday. “The Saudis clearly feel that their strategy is working and remain committed to it, despite the protests of many other OPEC members”, said Seth Kleinman, head of energy research at Citigroup.
Iran’s oil minister has said the country aims to boost production by 1 million barrels a day nearly immediately, although independent analysts say a figure of half that is more realistic in the next year. Right now, there are 2 million spare barrels of oil on the market every day.
“Dialogue and collaboration with consumers, non-OPEC producers, oil companies and investors are essential in reaching our common goal of a more orderly oil market”.
It was widely expected that ministers would either re-confirm the existing official production ceiling of 30m barrels per day or add to it 800,000 bpd of production from Indonesia, a former member that has made a decision to re-join the organisation.
OPEC will reportedly be sticking to its plan of flooding global markets with oil.
They said they saw little chance of Saudi Arabia making a formal proposal for OPEC output cuts, contingent on joint action from non-OPEC, as reported by an industry newsletter. The “breakeven” cost measures what oil price producers need to be profitable, the “cash cost” measures the absolute lowest level a producer can accept to keep their operation running (even if at a loss).
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“The only bright spot is the USA, where it looks like production will drop”, Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami, said by phone. The world’s fastest-growing source of crude this year, it was pumping more than 4 million barrels a day last month and was responsible for last month’s biggest monthly rise in output among all OPEC countries.
