Opec fails to agree on oil production ceiling

On the demand side, China is likely to double its strategic crude oil purchases next year to take advantage of a more than a 60% fall in oil prices since June 2014.

But despite reports suggesting Saudi Arabia could be ready to cut production in a bid to support prices at Friday’s meeting of the Organization of Petroleum Exporting Countries (OPEC), analysts say no one should expect magnanimity from the group’s largest producer.

This is a double-edged sword for the United States.

The Organisation of the Petroleum Exporting Countries was under pressure from some poorer members, including Venezuela and Algeria, to agree to slash output at its meeting in Vienna.

Members further decided that OPEC Secretary General Abdalla Salem el-Badri’s office will be extended for a period of six months in the organization.

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.

“Keeping OPEC’s policy the same heralds the start of a new era of speculation as to what levels oil prices could drop, especially with the slowing down of the global economy. Even if we keep cutting that doesn’t solve anything”, said OPEC President Emmanuel Ibe Kachikwu.

Iranian Oil Minister Bijan Namdar Zanganeh asked the OPEC to reduce production by at least 1.3 million barrels per day (mbpd) on December 1.

OPEC’s final communique stated that “climate change, environmental protection and sustainable development are a major concern for us all”.

Shares of Whiting Petroleum Corp, Continental Resources Inc and Oasis Petroleum Inc, top North Dakota oil producers, each fell more than 4 percent. The group pumped about 31.4 million barrels a day in October, according to its market report.

But Iran’s hopes of a cutback from others for now are unlikely to be fulfilled.

An internal OPEC document reviewed by The Wall Street Journal showed that, if current production remains unchanged, markets will still be oversupplied by 700,000 barrels a day in 2016-though that would be less than the glut of 1.8 million a barrel a day OPEC estimates for this year.

Some OPEC members are producing at their limit and like at previous meetings, the pressure was on swing-producer Saudi Arabia, which accounts for about a third of OPEC’s output, to cut back.

Due to low oil prices and struggling to preserve market share, some members within OPEC, such as Saudi Arabia and Iraq, have increased their individual production levels significantly in the past year, thus raising the total output of the cartel.