OPEC is unhappy with crude prices hovering at around $40 a barrel, but only a few members appeared ready to cut output in an attempt to drive up supply and prices.
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The goal would be to reduce the glut of oil on the global market and keep prices from plunging further. One possible scenario is for Opec to recognise the fact that members are pumping well in excess of the formal ceiling, and raise the group’s collective quota from 30 million bpd to 31.5 million bpd, in line with the current volumes, one source said.
His statements supported expectations the production group, now 13 members strong with the inclusion of Indonesia, was standing by existing policies rather than cutting output to put positive pressure on crude oil prices. On Friday Brent was down 1.2 per cent to $US43.31near midday trading in NY.
Benchmark Brent oil futures, which are near a six-year low, lost almost US$2 on the news, falling 1.5% to trade slightly above US$43 a barrel by 1455 GMT. The kingdom has said that cuts are possible, so long as they are across the industry – a declaration directed at Russian ears, as well as fellow OPEC members Iran and Iraq.
Speaking at the end of the Vienna meeting on Friday, Iranian Petroleum Minister Bijan Zangeneh said the talks ended without a concrete result, adding that the participants only made a decision on the replacement of OPEC Secretary-General Abdullah el-Badri.
OPEC fails to agree an oil production ceiling at meeting that ended in acrimony.
That’s led market commentators to opine the Saudis might be more amenable to a cut in 2016, should non-OPEC heavyweight Russian Federation come on board and there is an uptick in demand, while resisting a cut on Friday.
“In what I can imagine has been a couple of days of intense discussion (last year there were reports of shouting matches at the venue) you have to wonder how functional OPEC is with one dominant party calling the shots”, Youngman wonders. Iran is on track to return to the oil market if, as expected, sanctions are lifted early next year. Members set aside their previous daily output target of 30 million barrels, a ceiling breached for 18 months.
OPEC didn’t provide an official production ceiling in a communique or a press conference after its semi-annual meeting in Vienna, but said its output would remain around current levels because production cuts wouldn’t move the oil market enough.
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With oil prices plummeting below $40 per barrel, OPEC is meeting to decide what to do. The country’s oil exports were crippled by western sanctions over its nuclear program, but with those restrictions expected to lift in 2016, Iran says it can pump 1 million barrels a day more into a market that is already wrestling with supply problems.
