Given that Iran’s facilities can not increase exports by much more and that Saudi Arabia pledged restraint just as supplies are disrupted elsewhere – especially in Nigeria, Venezuela, Libya and the United States – traders said that the OPEC meeting was supportive of oil prices.
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“The worst is over for oil”, said Mohammed al-Sada, the energy minister for Qatar, at a news conference following the Vienna meeting.
Oil prices fell Thursday after a meeting of OPEC officials ended with the cartel unable to agree on limiting supply.
The meeting on Thursday in Vienna was set against a backdrop of political and economic rivalry between two of OPEC’s heaviest hitters: Saudi Arabia and Iran.
Saudi Arabia is already producing very close (or at) maximum capacity and it has no spare production to leverage against Iran, which has enough idle capacity to ramp up.
“We need to have a country quota but I don’t believe it will happen at this meeting”, he said, adding the meeting would focus on choosing a new OPEC secretary general.
Opec de facto leader Saudi Arabia had shown willingness to mend divisions earlier yesterday, with cash-strapped members demanding a new group ceiling.
Despite coordinated attempts by Opec, with rising output by Middle Eastern producers, the group’s overall production has remained largely flat this year, now standing at 32.5 million barrels per day (bpd). Iran, returning to the oil market after the lifting of sanctions, was opposed to a new target, preferring instead to impose quotas on individual Opec members. “But what is also important is that Saudis are not planning to flood the market and want higher prices”, he added.
A sustained recovery in oil prices could push up the cost of fuel and household energy bills in a blow to millions of households.
“The market is moving through the balancing process”, OPEC said.
Prices briefly topped $50 last week for the first time this year as production disruptions in Canada and Nigeria eased concerns about abundant global supplies, but they remain less than half of their 2014 peaks.
Opec secretary-general Abdalla al-Badri insisted that the failure to cap output did not undermine its status.
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OPEC also agreed to allow Gabon to rejoin the group. As a result, crude prices crashed to $27 (24 euros) per barrel in January – their lowest in over a decade.
