OPEC Maintains Production Levels

Oil prices fell on Friday after the Organization the Petroleum Exporting Countries announced plans to maintain production near record highs despite depressed prices, as the producer group continued to guard its share of an oversupplied market.

As in two previous meetings, however, the group couldn’t overcome a fundamental divide. Saudi Arabia yesterday repeated the kingdom’s stance that it would be willing to cut as long as non-Opec also reduces its output.

West Texas Intermediate crude for January delivery dropped 91¢, or 2.2%, to $40.17 a barrel at 11:56am on the New York Mercantile Exchange.

Emmanuel Ibe Kachikwu, left, Nigeria’s oil minister and OPEC president, and OPEC Secretary General Abdullah al-Badri arrive for a news conference after a meeting of OPEC oil ministers in Vienna, Austria, on Friday.

Market analysts expect oil prices to fluctuate in the coming months.

Venezuela is proposing taking 1.5 million barrels a day of production out of the market.

According to the statement, the conference is focused on enhancing market stability, which will be of benefit to all stakeholders and contribute to global economic growth. He said he expected OPEC to maintain production policies on Friday. This is after commitments from companies representing $50 billion in assets in September. That’s the lowest level since late August when crude crumbled to six-year lows.

There had been reports earlier this week about division among OPEC members about whether to cut output, amid a growing supply glut that is keeping oil prices lower.

Surging oil production from non-OPEC nations like the USA has created a deep divide inside OPEC.

Uncertainty over Iran’s future output played a part in no ceiling being agreed: Tehran says it will not consider any curbs until it restores production to pre-sanction levels – an extra one million barrels a day at least.

“There is nothing at the moment that could be done from OPEC to correct the situation”, said an OPEC delegate from a Persian Gulf Country. OPEC’s next meeting is scheduled for June.

Saudi Arabia’s oil minister Ali al-Naimi (C) speaks to journalists as he attend the OPEC meeting …

The decision effectively leaves it up to individual members how much crude to pump and was a strong signal of OPEC’s eroding ability to act as a group in efforts to influence supply, demand – and prices.

Iran once pumped around four million barrels a day and is now down to about half that.

That is likely to exacerbate tensions within the group further if it continues to depress global oil prices.

He stressed the need for continuous dialogue, citing the positive examples between OPEC and non-OPEC countries and the Asian Ministerial Energy Roundtable held in Qatar in November. The cartel yesterday published no figures on output in its communique, as it awaits increased output from Iran after sanctions were lifted on the Islamic republic.

“By then they have a better feel for Iranian production; how much damage has been done to shale production; and how many offshore and oil sands projects have been delayed or scrapped”, Williams said. “So we chose to postpone the decision until the next Opec meeting, when the picture will be clearer”.

Still, geopolitical considerations could also continue to weigh against the pressure to cut production to push prices higher.