Saudi oil minister Ali al-Naimi earlier had said he hoped growing global demand could absorb an expected jump in Iranian production next year: “Everyone is welcome to go into the market”.
Advertisement
Iran won’t accept any production curbs until it restored about 1 million barrels a day of output, Oil Minister Bijan Namdar Zanganeh said on Friday before sitting down with his OPEC counterparts. “So, we chose to postpone this decision to the next OPEC meeting until the picture becomes clearer for us to decide on a number”, Al-Badri said.
Saudi Arabia along with Kuwait, UAE and even Qatar consist the main supporters of preserving the status quo of supply and demand as well as the price of crude oil in the market and are consequently opposed to any reduction in production rates. A stronger USA currency weighs on dollar-priced commodities, including oil, by making them more expensive for buyers using foreign currencies.
Ecuador Oil Minister Carlos Pareja said an informal meeting of his OPEC counterparts on Thursday – unusual in recent years and held in a hotel rather than at the group’s headquarters – was “difficult”.
Well, OPEC’s secretary general says there was no consensus on how much oil Iran will add to the market next year due to the pending lift of sanctions. Neither of these developments is likely to push crude oil prices higher.
Dr. Kachikwu who is also head of Nigeria’s delegation to the 168th Ordinary OPEC Meeting made this assertion while addressing the OPEC Ministers Conference in Austria, Vienna.
OPEC on Friday did not set a new oil output ceiling, with major oil producers reluctant to cut the supply.
The Saudis have said they are only willing to talk about production cuts if Iran, Iraq and non-OPEC members like Russian Federation do the same.
United States crude had dropped below $40 after the Opec news, but failed to stay below that level for long. Opec has pumped more than its collective target of 30mn barrels a day for the past 18 months, data compiled by Bloomberg show. The cartel yesterday published no figures on output in its communique, as it awaits increased output from Iran after sanctions were lifted on the Islamic republic.
The oil-producing group met in Vienna on Friday and announced that its members would keep production levels of about 31.5 million barrels per day, sending the price of Brent crude down almost 2.5 per cent to US$43 per barrel.
“This decision reflects the consensus going into the meeting of OPEC’s policy for prices needing to find a floor to deter new non-OPEC supply projects”, Gareth Lewis-Davies, London-based energy strategist at BNP Paribas SA, said by phone.
For Saudi Arabia, low oil prices and the prospects of big fiscal deficits have already prompted officials to float the idea of potentially unpopular reforms, including introducing a value added tax and cutting energy subsidies.
“While oil advanced for the second day ahead of the OPEC meeting, there is really nothing much to cheer about”, said Bernard Aw, market strategist at IG Markets in Singapore.
Advertisement
Mr Andlauer said that Iraq, Mexico and Russian Federation could increase production to offset the decrease in shale from North America, as only a couple of shale players can remain profitable with oil prices hovering at $40 per barrel.
