OPEC scraps output ceiling

None of the member countries can balance their budgets at current oil prices, and many of them need prices double what they are now to ease growing fiscal strains.

Iran, which once pumped around 4 million barrels a day and is now down to about half that, is preparing to come back fully on line once it sheds nuclear-related sanctions in a few months.

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.

Iran’s Minister of Petroleum Bijan Namdar Zangeneh speaks to journalists at a hotel in Vienna, Austria, Thursday, Dec. 3, 2015.

The Organization of the Petroleum Exporting Countries on Friday elected to maintain current oil production levels despite apparent disagreement among members about the strategy.

In view of this, and emphasizing its commitment in ensuring a long-term stable and balanced oil market for both producers and consumers, the Conference agreed that member countries should continue to closely monitor developments in the coming months.

But Moscow repeated this week it saw no chance of joint actions, and Iran and Iraq on Friday showed no willingness to curb supply either.

According to him, as far as supply is concerned, non-OPEC countries would continue to see significant reduced production growth as compared to past years.

Crude oil prices rose on Friday as OPEC ministers met in Vienna, while the dollar hovered near one-month lows a day after staging its largest one-day fall in almost seven years. And if a Saudi-led production cut occurred without non-OPEC- member countries reducing their production, even many OPEC countries believe it might not give prices a lasting lift, meaning Saudi would gain nothing even while creating an opening for Iran to boost sales. He said he hopes the extra output will be accommodated within OPEC’s formal ceiling of 30 million barrels a day.

Emmanuel Ibe Kachikwu, the Nigerian minister, reinforced the message, saying the market shouldn’t worry about the “semantics” of targets or real production.

The move helped send oil prices tumbling, but although US producers cut costs and jobs, it didn’t initially put a dent in the country’s oil production.

The OPEC nations, consisting of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Indonesia and Venezuela, have declared that they have no intention of lowering their oil production levels.

“At the end of the day, every country has a sovereign right to bring its resources to the market place”. The group accounts for about a third of world oil output and does not include Russian Federation or the U.S., which rival Saudi Arabia as the world’s biggest producers. But the desert kingdom remained opposed. Energy company shares, including those of US oil major Exxon Mobil and oil service companies Baker Hughes and Halliburton fell after the OPEC news.

USA benchmark West Texas Intermediate (WTI) for delivery in January was up 28 cents at US$41.36 and Brent crude for January was trading 26 cents higher at US$44.10 at around 0600 GMT.