OPEC ministers keen to keep oil production at current levels

“Even if we keep cutting that doesn’t solve anything”, said OPEC President Emmanuel Ibe Kachikwu.

A recent surge in US production of shale oil has provided more competition for OPEC producers.

According to the OPEC’s monthly oil market report in November, the total output level stood 31.4mbpd in October.

Oil prices have hovered near $US40 a barrel in recent weeks on ongoing concerns about the global oversupply of crude, which had sent prices plunging in late 2014. The kingdom, the group’s biggest producer and architect of the current policy, has steadfastly opposed a cut in output unless countries outside the group cooperate. It was pumping more than 4 million barrels a day last month and was responsible for last month’s biggest monthly rise in output among all OPEC countries.

He said the downward trend stems mainly from the impact of investment cutbacks and the drop in United States tight oil output, which has been declining since May 2015. “The Saudis aren’t going to make any cuts unless they get cooperation both within and outside of OPEC”. “Everyone does whatever they want”. Neither of these developments is likely to push crude oil prices higher.

Light, sweet crude for January delivery settled down $US1.11, or 2.7 per cent, at $US39.97 a barrel on the New York Mercantile Exchange.

Brent futures fell 1% to $43.39 per barrel. It’s down 3.3% this week. “We need to look to non-OPEC members also to join us in this stability drive”. “The Saudis didn’t blink”.

Naeem Aslam, chief market analyst at Ava Trade, said the danger now is that OPEC members will continue to boost production on their own in a bid to maintain market share. After a pre-meeting on Thursday, a senior OPEC delegate told the Financial Times that a production cut would come only if Iran, Iraq and non-OPEC members like Russian Federation also agreed to cut production. “Practically, there is now no ceiling for OPEC”, he said.

“We will have to accommodate Iran one way or the other”. The glut – combined with the slowdown in many emerging markets and China in particular – has kept oil below $50 a barrel for much of this year. “The burden to adjust supply remains on non-OPEC producers”.

Saudi oil minister Ali al-Naimi said he hoped growing global demand could absorb an expected jump in Iranian production next year. By 1330 GMT, the ministerial meeting behind closed doors had been in progress for almost three hours.

OPEC will wait until June to decide on a new limit, Secretary General Abdalla El-Badri said.

It appeared for a while OPEC would raise its current 30 million barrels per day (bpd) cap on production, but negotiations broke down after Iran said it would not accept any limits until it emerges from Western-imposed sanctions.

During a long day – Friday’s 168th ministerial meeting was the longest for many years – very strong rumours emerged that Opec meant to increase its 30m bpd production ceiling to 31.5m bpd to effectively formalise the production that now exceeds it. These rumours turned out to be false and instead Opecc stunned the press room with its decision to dispense with an official production ceiling.