OPEC Should Specify Output Ceiling after Iran Sanctions Relief: Iraqi Minister

Venezuela, Algeria and Nigeria argued strongly that Opec’s production ceiling should be cut to support prices so the fact that it has been removed is a major blow to their prestige.

Another factor behind Opec’s thinking is the wait to see how much further oil production will fall in the United States.

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.

According to Bloomberg, a Nigerian official said the group chose to maintain production at 31.5 million barrels per day. “We did say that we’d watch prices”. OPEC pumps four-in-10 barrels worldwide.

“We are looking for stability in the market”, said Venezuelan minister Eulogio Del Pino.

Oil and Gas UK represents 500 oil and gas companies.

A glut of crude may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc. If prices recover sharply, it could revive some US shale production, displacing OPEC crude.

This approach from OPEC, however, could send oil prices even lower as markets may still fail to clear oversupply.

Cheap oil that could get even cheaper: That’s the challenge OPEC ministers face as they try to cut their losses at a time when supply is outstripping demand. Iran is poised to boost output after sanctions over its nuclear program are lifted and it won’t seek permission from OPEC to do so, Zanganeh said last month. “Shale is the new reality”.

The group’s official communiqué made no mention of its existing output target of 30m barrels a day, saying only that it would continue to “closely monitor developments”.

OPEC has reportedly agreed to raise its production ceiling to 31.5 bpd.

OPEC’s decision to keep production at near record levels has done Britain’s oil industry in the North Sea no favours either. Iran is on track to return to the oil market if, as expected, sanctions are lifted early next year.

“The stock-build will continue to weigh on the market, with prices unlikely to move beyond the current range until well into 2017”, Chris Bake, a senior executive at Vitol Group, the biggest independent oil trader, said December 2. “The generally strong dollar trend [is] just one additional bearish item that the oil complex will need to contend with” this month, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates.

OPEC’s decision to stand pat effectively kicks the can down the road to its next meeting.

Opec abandoned production quotas for individual members several years ago and most members have been producing as much as they want.

The next OPEC meeting isn’t scheduled until June 2016, but some oil ministers departing the meeting on Friday said there could be one before then. Russian Energy Minister Alexander Novak said Thursday that the country doesn’t see a production cut as viable.

Saudi Arabia on Friday repeated the kingdom’s stance that it would be willing to cut as long as non-OPEC also reduces its output.