OPEC ministers agree to keep production at current level, above formal ceiling

According to Reuters, the group decided not to cut its production levels. 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.

Emmanuel Ibe Kachikwu, left, Nigeria’s oil minister and OPEC president, and OPEC Secretary General Abdullah al-Badri arrive for a news conference after a meeting of OPEC oil ministers in Vienna, Austria, on Friday. Brent fell 2.3 percent to $42.84 a barrel at 3:09 p.m. London time Thursday, while West Texas Intermediate crude dropped 3 percent to $39.83.

In June previous year, crude had traded above $100 a barrel, but has since plunged on a global supply glut, weak demand growth and a strong dollar.

Saudi Arabia has pushed OPEC down a painful approach: aggressively pump oil to keep prices low and crowd out high-cost producers.

Iaq’s oil minister, Adel Abdel Mahdi, has indicated his country intends to increase output levels in 2016, as OPEC fights to maintain its market share and drive competitors out of the market.

A final statement was issued with no mention of a new production ceiling, apparently allowing member countries to continue pumping oil at current rates into a market that has been oversupplied.

Most analysts weren’t expecting a production cut by OPEC, despite Saudi Arabia’s softer stance in the days leading up to the meeting. According to the U.S. Energy Information Administration, American oil producers produced an average of about 9.3 million barrels of crude oil per day in June, the latest data immediately available, adding to the global oversupply.

Iran has made its position clear ahead of the meeting with Zangeneh saying Tehran would raise supply by at least 1 million barrels per day – or one percent of global supply – after sanctions are lifted.

“We will be looking at a teeter-totter market”, said Daniel Yergin, the Pulitzer Prize-winning oil historian and vice chairman of industry consultants IHS Inc.

OPEC oil ministers have effectively scrapped their official output ceiling and agreed to keep producing above that level.

Opec’s poorer nations – notably Venezuela, Ecuador and Algeria-had led the calls for a cut to help boost prices and in turn their badly-hit revenues. Yet prices have only plunged since then.

The cartel’s official quota is 30mbpd, but the cartel’s total or actual output varies, since the production volume of its members change every month.

The Saudis have said they are only willing to talk about production cuts if Iran, Iraq and non-OPEC members like Russian Federation do the same.

Saudi Arabia, OPEC’s biggest producer and architect of the current policy, has remained opposed to a production cut. OPEC requires consensus among members to alter its output ceiling.