“We did say that we’d watch prices”.
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OPEC rears its stubborn head once again.
Oil prices have nearly halved over the past 18 months as a result of a global supply glut. “This is a holding decision”.
The Conference decided that its next ordinary meeting will convene on Thursday, June 2, 2016 in Vienna, Austria.
Robert Minter, a strategist at Aberdeen Asset Management Investment, said: “The meeting was a bit of a disaster”.
He disclosed that world oil demand this year grew by 1.5 million barrels per day, up from 1 million barrels per day last year.
Poorer OPEC members such as Venezuela and Ecuador, whose economies have been hit by the plunge in prices, are demanding a cut to the cartel’s overall ceiling. The statement released Friday said that the group will “closely monitor market developments in the coming months”. “We will come through this…it’s a tough, challenging time but if we stay the course in terms of improving our costs and improving our efficiency we will be able to manage the volatility of what we’re seeing”. “So we chose to postpone the decision until the next Opec meeting, when the picture will be clearer”.
Iran once pumped around four million barrels a day and is now down to about half that. Despite the perpetual appeals to reduce output and support oil prices, OPEC has been refusing to do so as the organization is trying to maintain its market share. “Americans don’t have any ceiling, Russians don’t have any ceiling, why should OPEC have a ceiling?” That seems unlikely and doesn’t even account for the US, where independent oil operators do what’s best for themselves.
Reports from OPEC’s Friday meeting indicate that there has been no agreement between Saudi Arabia and other producers to balance the global market.
Faced with low prices and plentiful supply, OPEC oil ministers are pondering ways to turn the market around – but may lack options to do so.
West Texas Intermediate crude for January delivery dropped 91¢, or 2.2%, to $40.17 a barrel at 11:56am on the New York Mercantile Exchange.
Meanwhile, the General Director of OPEC Affairs in Iran’s Oil Ministry Mehdi Asali had announced the possibility of change in OPEC’s quota system by joining Indonesia at Friday’s meeting stressing that Iran would not vote for Saudi candidate in electing the new secretary general of OPEC. “Then we will decide on what to do”, Kachikwu added.
“The cartel is basically broken”, said Matthew Smith, director of commodity research at ClipperData, which tracks global crude shipments.
Earlier in the day, Mr Zangeneh said limiting Iran’s output was “not a matter of negotiation”.
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.
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“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”, Mr. Kachikwu said. “The price was $60 at the last meeting [in June], it is $40 now”.
