Iran Plans No Output Curb: Oil Minister

Light, sweet crude for January delivery settled down $US1.11, or 2.7 per cent, at $US39.97 a barrel on the New York Mercantile Exchange.

While OPEC previously had a production ceiling of 30 million barrels a day, members have been producing closer to 31.5 million barrels a day, according to market estimates. That seems unlikely and doesn’t even account for the USA, where independent oil operators do what’s best for themselves. “Moreover, the WTI is still defended aggressively at the US$40 mark, after closing down 4.6 percent lower on Wednesday at US$39.94”.

Dr. Kachikwu who is also head of Nigeria’s delegation to the 168th Ordinary OPEC Meeting made this assertion while addressing the OPEC Ministers Conference in Austria, Vienna.

In a note to clients on Friday following OPEC’s latest production announcement, Goldman’s Damien Courvalin wrote that the oil market’s supply and demand balance won’t be restored until the fourth quarter of 2016 at the earliest.

Paris // Opec will not risk its market share and further disruption to oil markets, an analyst said after it maintained output despite a 35 per cent slump in crude prices this year.

At a press conference after the meeting ended, OPEC secretary general Abdalla el-Badri said OPEC had not included a ceiling figure in its communique because it hoped to continue negotiations with independent producers on managing supply.

“The world’s dynamics have changed and we need to look at other parameters for sustaining prices”, OPEC president Emmanuel Ibe Kachikwu said.

After Friday’s OPEC decision “everyone does whatever they want”, said Iranian Oil Minister Bijan Namdar Zanganeh.

One place where production is projected to fall is the US where oil drillers have idled more than half the country’s rigs in the past year.

The group will maintain its current production, about 31.5 million barrels a day.

Last year, OPEC nations accelerated production in an effort to protect its market share from fracking operations in North America.

That strategy clearly hasn’t worked, with benchmark USA crude’s value falling by more than 40 percent over the past year and now hovering around the $41 mark per barrel.

“I don’t see how anybody in their right mind thought that the Saudis were going to cut production”, said Mike Breard, oil company analyst at Hodges Capital Management in Dallas.

The decision does not in fact mean that one additional barrel of oil will be produced: only Saudi Arabia and other Middle East Gulf countries have any scope to increase production and they are unlikely to do so with the oil market already suffering from excessive supply that has seen stocks of crude oil and products reach a record level of 3bn barrels.

OPEC signaled no respite from the global oil glut that has driven prices to a six-year low.

USA energy firms this week cut oil rigs for the 13th week in the last 14, data from Baker Hughes showed on Friday, down 10 to 545, the lowest since June 2010.