The oversupply has sent the price of Brent, a global oil benchmark, to a six-year low, triggering the worst slump in the energy sector since the 2008 world financial crisis.
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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. “We just feel comfortable to wait and watch around this time”, Emmanuel Ibe Kachikwu, Nigerian petroleum minister and OPEC conference president, said Friday.
Saudi Arabia on Friday repeated the kingdom’s stance that it would be willing to cut as long as non-OPEC also reduces its output.
The Iranian minister also stressed that Tehran was ready to negotiate a ceiling for its production, but after it makes a “full return to the market”.
Unusually, the group didn’t provide a new production ceiling figure – previously set at 30 million barrels per day, about a third of estimated global demand.
– Says that worldwide oil companies have responded positively to Iran’s production contract proposals so far, but have yet to sign MOUs.
A significant change in policy could only happen if some of the bigger producers outside of OPEC, such as Russian Federation, made a decision to join in a coordinated reduction in output.
OPEC’s poorer nations – notably Venezuela, Ecuador and Algeria – are leading the calls for a cut to help boost prices and in turn their badly-hit revenues.
Iran, which once pumped around 4 million barrels a day and is now down to about half that, is preparing to come back fully on line once it sheds nuclear-related sanctions in a few months.
Ahead of Friday’s meeting, OPEC already was churning out well over than 31 million barrels a day and OPEC members are likely to continue producing more than their share as they push to compensate for low prices by increasing output.
But Moscow repeated this week it saw no chance of joint actions and Iran and Iraq on Friday showed no willingness to curb supply either.
But the Saudis and their Gulf allies have been sticking to their strategy of defending market share – hoping that lower prices may ultimately drive higher cost producers such as USA shale firms out of the market.
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“The market did not take the announcement out of OPEC very well today as OPEC appears to really be in disarray among its members and they took the path of least resistance, which was to do nothing and wait to see if things get better”, said Andy Lipow of Lipow Oil Associates.
