Crude hits new low as OPEC decides ‘everyone does whatever they want’

Crude oil prices dipped further on Monday after OPEC failed to agree on output targets to reduce a bulging glut that has cut prices by more than 60 percent since June 2014.

OPEC agreed to set a new oil-output ceiling of 31.5 million barrels a day, a level that’s in line with the group’s most recent production estimate.

OPEC meets here on Friday to decide on whether to cut its oil production faced with an abundance of crude that has sent prices crashing.

Crude Oil prices dove about 40% in the last year, with global benchmark Brent Crude headed for its lowest annual average in a decade after reaching a 6-year low of 42.23 on 24 August.

Many poorer OPEC members have said the group’s largest producer was effectively twisting their arms, prompting the Saudi oil minister, Ali al-Naimi, to say he would listen to everyone this time.

“The overproduction we have from OPEC is going to produce a catastrophe in the price”, argued by Eulogio Del Pino, Venezuela’s Oil Minister.

They said state-owned CPC Corp., Taiwan is likely to cut gasoline prices by NT$0.1 (US$0.003) per liter and lower diesel prices by NT$0.2 per liter next week after deciding to hike gasoline prices by NT$0.2 a liter and diesel prices by NT$0.3 a liter this week. Global stockpiles have expanded to nearly three billion barrels as the Saudis, Russia and Iraq increased supply, according to the International Energy Agency.

Senior oil official Amir Hossein Zamaninia said last week Iran hopes to bring an extra 500,000 barrels on the market by early next year.

Although it is expected to take months or even years before the sanctions are fully lifted and the effects have vanished, a production limit would be devastating for Iran’s oil industry ahead of the implementation day.

Saudi Arabia, the world’s biggest oil exporter, is banking on producers of unconventional oil buckling for output to fall. One source said that Indonesia was not.

Understandably, many are furious that the oil price has been allowed to drop so low. “Oil is already there, and the market is oversupplied right now”, he added.

Iraqi Oil Minister Adel Abdel Mahdi said his country would further increase output next year after having steeply boosted production in 2015.

Reducing the oil output by 2 or 3 million barrels is not the real solution. “So, Opec’s role in influencing the overall prices of oil has been diminishing and I do not think they can do much about it”, said DK Joshi, Director & Chief Economist at Crisil. Prices are down 26 per cent this year.

Saudi Arabia has been content to keep production up, a move which has squeezed non-OPEC producers, including the United States, that have struggled to maintain profits in the face of low prices.