Kachikwu Rallies OPEC Members On Stable Global Oil Price

At the end of their meeting, member nations of the Organization of the Petroleum Exporting Countries surprisingly failed to agree on how much oil to produce.

Indonesia’s re-entry will “simply acknowledge the reclassification of Indonesian output from non-OPEC to OPEC production”, said Julian Jessop, analyst at Capital Economics research group.

Eventually, after several hours of negotiations, OPEC oil ministers could not reach an agreement for the production ceiling to remain unchanged in the range of 30 million barrels per day. OPEC will wait until its next meeting in June to confirm its output target, said Secretary General Abdalla El-Badri.

Hope of increase in oil prices may not be lost as Minister of State for Petroleum Resources and President of the Organization of the Petroleum Exporting Countries (OPEC), Dr. Ibe Kachikwu has predicted demand for OPEC crude to rise by 1.2 million barrels per day to average 30.8 million barrels per day for next year.

With oil prices hovering near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production.

“This decision reflects the consensus going into the meeting of Opec’s policy for prices needing to find a floor to deter new non-Opec supply projects”, Gareth Lewis-Davies, London-based energy strategist at BNP Paribas, said by phone.

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. The market is oversupplied by as much as 2 million barrels a day, Zanganeh said.

USA oil production has also complicated things for OPEC.

In the meantime, this is no consolation to those members of Opec who have been particularly badly affected by the collapse in crude oil prices from $115 a barrel in June 2014 to close to $40 a barrel today. “So, if you want to put a number on that, that would be the current production number”, he said.

“If they all agreed to a quota, that would mean more pressure on the market and would also indicate no future cut [in production] next year, ” said Alexandre Andlauer, a Paris-based oil and gas analyst at AlphaValue. OPEC requires consensus among members to alter its output ceiling.

Brent crude closed on Wednesday at $42.49 a barrel, the lowest since 2009, when demand slumped during the global financial crisis.

This despite slowing growth in global oil demand, largely because of weaker economic output in China, the world’s biggest consumer of energy.

Friday’s announcement sent ripples through wider markets and dented shares of USA energy drillers already suffering from low prices, but losses in oil futures were limited as prices hit key support levels around $40 a barrel.