Iraq keeping oil production plans

One of the key reasons why oil is cheap today is because of a decision made by the Saudi and other OPEC countries one year ago. The group of exporters seeks to rebalance supply and demand by pressuring higher-cost producers to curb production. Ultimately, crude oil settled at $39.94 a barrel.

Brent for January settlement climbed 84 cents, or 2 percent, to $43.33 a barrel at 11:29 a.m. on the London-based ICE Futures Europe exchange. Prices hit this level in November 2015. Aleyya also mentioned that the unstable prices were of benefit to consumer states or developing countries as the low prices allowed them to use the money to increase the rate of local and foreign investments. Meanwhile economic and oil expert Bashir Aleyya said the drop in crude oil prices would cause deficit in the GCC states in the long term despite the huge financial reserve these countries have.

“And we do not expect out colleagues in OPEC to put pressure on us…” It comes after Russian Federation has been working its way into Saudi Arabia’s once undisputed market in Asia for the past decade. That is to take the pain now and earn the gain later. Embargoes on Iranian oil are to be lifted over the next few months once a nuclear deal it signed with six world powers goes into force.

“China’s implied oil demand growth… grew at 3.8 percent year-on-year in October (407,000 barrels per day), an improvement relative to the 226,000 barrels per day growth in September”, Barclays said.

“It’s not a matter of discussion with anyone to limit the level of production of Iran” below 4 million barrels a day, Zanganeh told reporters in Vienna.

Will Saudi Arabia keep pumping oil at an all-out pace? According to his estimates, only 70% of shortfall in production can be substituted with the price of $40 a barrel.

Algeria, Angola, Nigeria and Venezuela need higher prices.

One possible scenario is for OPEC to recognize the fact that members are pumping well in excess of the formal ceiling, raising the group’s collective quota from 30 million bpd to 31.5 million bpd, in line with the current volumes. But even the Saudis are feeling the pinch of low oil prices. The world’s fastest-growing source of crude this year, it was pumping more than 4 million barrels a day last month and was responsible for last month’s biggest monthly rise in output among all OPEC countries. Iran, which also advocates a reduction by OPEC, has plans to boost its own output should worldwide sanctions be lifted early next year. Since cartel heavyweight Saudi Arabia continues to suggest it is not in favour of a production cut, the market appears to be pricing in a no-change scenario at OPEC.

Persistent low prices into 2016 may make it harder for shale-oil producers to restart because of funding problems, even if prices rebound, Melek said.