OPEC Votes To Maintain Current Oil Production Levels

Iraqi Oil Minister Adel Abdel Mahdi said his country would further raise output next year after having steeply increased production in 2015.

OPEC fails to agree an oil production ceiling at meeting that ended in acrimony.

“The pressure will build on OPEC and oil prices”.

The Minister of State for Petroleum Resources and President of the Organisation of the Petroleum Exporting Countries (OPEC) Conference, Dr. Ibe Kachikwu has said the demand for OPEC crude was expected to rise by 1.2 million barrels per day to average 30.8 million barrels per day for the year 2016 leading to a more balanced market.

A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices.

Rather than cut output, like many smaller OPEC members were pushing for, Saudi Arabia once again muscled its way through the meeting, and forcing the oil cartel to maintain output levels. Opec is now pumping out around 32 million barrels of oil per day. A cut in daily output would have eased pressure on oil prices, which are near historic lows.

Faced with low prices and plentiful supply, OPEC oil ministers are pondering ways to turn the market around – but may lack options to do so.

That plan clearly hasn’t worked, with benchmark US crude’s value falling by more than 40 percent over the past year and now hovering around the $40 mark per barrel.

Iran, which was once the second biggest oil producer in OPEC, has repeatedly stated that it is planning to increase its oil production by 500,000 barrels per day immediately after the sanctions are lifted, and by another 500,000 barrels per day within the following six months. The statement said that the downward trend would stem mainly from the impact of investment cutbacks and the drop in US tight oil output, which had been on the decline since May 2015.

“We chose to postpone this decision until the next OPEC meeting, when the picture will be more clear”, OPEC Secretary-General Abdalla Salem el-Badri of Libya told reporters, according to CNN.

Both contracts had gained since a sharp fall on Wednesday that saw WTI close below US$40 for the first time since late August.

The group, which gave up individual production quotas several years ago in favor of an aggregate production ceiling, also appeared to have largely done away with those restraints, as well.

Given that need, some in the US oil industry had held out hope that OEPC would actually lower its production at Friday’s meeting, an expectation that now seems misguided as Saudi Arabia, the group’s de facto leader, has aggressively pursued a strategy of high production in order to rattle USA rivals. Prices fell 4.2 per cent on the week.

“One of the reasons that we did not really mention an amount is because we are looking to negotiate with non-OPEC more and see how we can reach a collective effort that all of us should contribute to the market”, he said.

“The OPEC member countries have lost so much money”, Zanganeh said Thursday in the Austrian capital.