OPEC has announced that it will maintain current oil output at a meeting last week, rather than cut production to lift sagging crude prices
Despite oil prices plunging by more than 60 per cent in 18 months, OPEC kingpin Saudi Arabia and the cartel’s other Gulf state members have defied calls to reduce output — in a year-long strategy of attempting to preserve market share and fend off competition from non-OPEC and world leading producers Russia and the USA.
Saudi Arabia repeated the Kingdom’s stance that it would be willing to cut as long as non-OPEC also reduces its output.
“We have said on more than one occasion that we are willing to cooperate with anyone that will help balance the market with us,” Saudi Arabia’s oil minister Ali al-Naimi told reporters gathered at OPEC headquarters in Vienna.
OPEC’s secretary general Abdullah al-Badri said OPEC could not agree on any figures because it could not predict how much oil Iran would add to the market next year, as sanctions are withdrawn under a deal reached six months ago with world powers over its nuclear programme.
OPEC’s ‘poorer’ nations — Venezuela, Ecuador and Algeria — were leading the calls for a cut to help boost prices and in turn their badly-hit revenues.
“Everyone is concerned about the prices, no one is happy,” said Iraq’s oil minister Adil Abd Al-Mahdi.
For its part, Iran has indicated that it would not take part in any cartel-wide cuts until its own output returns to pre-sanction levels.
Markets expect the OPEC, whose dozen members together pump out more than one-third of the world’s oil, to leave its daily oil output ceiling at 30mn barrels, although it may increase this to reflect Indonesia’s return to the cartel after a six-year absence.
According to a survey by Bloomberg, OPEC production in November 2015 rose to an above-target 32.1mn bpd.
Indonesia is producing about 850,000 bpd and OPEC could increase its daily output ceiling to 30.85mn to reflect the change, according to analysts.
In June last year, crude had traded above US$100 a barrel, but has since plunged on a global supply glut, weak demand growth and a strong dollar.
