Oil prices up as divided OPEC meets

As the meeting convened, conference president Emmanuel Ibe Kachikwu described the oil industry as “in the midst of another challenging cycle”.

OPEC will reportedly be sticking to its plan of flooding global markets with oil.

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.

“One of the reasons that we did not really mention an amount is because we are looking to negotiate with non-OPEC more and see how we can reach a collective effort that all of us should contribute to the market”, he said.

The Organization of Petroleum Exporting Countries sent crude prices reeling a year ago when it chose to maintain output as it sought to force higher-cost producers to scale back their operations in an oversupplied market. Instead, the organization’s endorsement of present output, which is more than 1.5 million barrels a day above the formal ceiling of 30 million barrels, is likely to push the price of oil down further.

Iranian oil minister Bijan Zangeneh has said Iran’s goal is to increase output by half a million barrels a day in early 2016, and eventually raise it by one million barrels, bringing Iran’s daily total to around 3.8 million barrels a day. The group pumped about 31.4 million in October, according to estimates in its monthly market report.

The path is now open for Iran to increase production by as much as 1 million bpd, once it is free from economic sanctions.

Meanwhile, the General Director of OPEC Affairs in Iran’s Oil Ministry Mehdi Asali had announced the possibility of change in OPEC’s quota system by joining Indonesia at Friday’s meeting stressing that Iran would not vote for Saudi candidate in electing the new secretary general of OPEC. “At this rate of overproduction we will run out of onshore storage in the first quarter”, said Gary Ross, a veteran Opec watcher and the founder of PIRA think-tank.

The statement released on Friday said the group will “closely monitor market developments in the coming months”.

To the minister, as far as supply is concerned, non-OPEC countries would continue to see significant reduced production growth as compared to past years, noting: “In fact, in 2016, we anticipate a contraction in non-OPEC oil supply”. Saudi Arabia yesterday repeated the kingdom’s stance that it would be willing to cut as long as non-Opec also reduces its output.

OPEC will maintain production at current levels and refrain from setting an official output target, a continuation of the Saudi Arabia-led policy that has driven prices to a six-year low.

The crash in oil prices has OPEC so divided that the only thing the cartel can agree on is not to agree at all.

Marathon Oil Corp (MRO.N), Hess Corp (HES.N) and Occidental Petroleum Corp (OXY.N) each fell between 1 to 2 percent. This would add to the global glut as the world is now already consuming up to 2 million bpd less than it is producing.