Oil group OPEC yesterday agreed to stick by its policy of unconstrained output for another six months, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports.
Concluding a meeting with no apparent dissent, Saudi Minister of Petroleum and Mineral Resources Ali al-Naimi said OPEC had rolled over its current output ceiling, renewing support for the shock market treatment it doled out late last year when Saudi Arabia, the world’s top supplier, said it would no longer cut output to keep prices high.
The group is to meet again on Dec. 4, al-Naimi said.
Photo: Reuters
With oil prices having rebounded by more than a third after hitting a six-year low of US$45 per barrel in January, officials meeting in Vienna saw little reason to tinker with a strategy that seems to have resurrected moribund growth in world oil consumption and put a damper on the US shale boom.
Al-Naimi, emerging from the talks, said he was happy with the decision. He told reporters ahead of the meeting that he was confident production from marginal fields would fall even at current prices.
“The decision taken in November was the right one,” United Arab Emirates Minister of Energy Suhail al-Mazroui said earlier, referring to OPEC’s previous meeting. “It will take time for the markets to rebalance.”
Yesterday’s decision defers discussion of several tricky questions set to arise in the coming months, as members such as Iran and Libya prepare to reopen the taps after years of diminished production.
Iranian Minister of Petroleum Bijan Zanganeh earlier promised to press the group for assurances that other members would give Tehran room to add as much as 1 million barrels per day of supply once Western sanctions are eased. However, most delegates saw little reason for Tehran to pick a fight now.
“When the production comes, this matter will settle itself,” one OPEC delegate told reporters.
That might not occur until next year, according to many analysts who question how quickly Tehran will win relief from sanctions and be allowed to sell more crude.
Libya, still afflicted by a crippling civil war, hopes to double production to about 1 million barrels per day by September if key ports resume working, but past efforts have failed to deliver a sustained recovery in shipments.
Brent crude oil futures slipped to less than US$62 per barrel yesterday, nearing their lowest price in seven weeks, and US oil is on track for its first weekly decline since March as traders anticipate a rollover decision and see weakening physical market conditions. However, prices are still US$15 off their lows, and some analysts see further gains ahead.
OPEC output has exceeded the group’s 30 million barrels per day ceiling for most of the past year, reaching 31.2 million barrels per day last month, its highest in three years, according to a Reuters survey. However, there was little interest in adjusting that limit this week, as some analysts had suggested might happen.
Notably absent from this week’s agenda were efforts to push for output constraints — even from hawks such as Venezuela, which faces deepening budget woes at prices less than US$100 per barrel.
In other business, OPEC appeared set to grant Indonesia’s request to rejoin the group after a more than six-year hiatus in its membership. Now a net importer of oil, Indonesia hopes to foster better dialogue between producers and consumers.
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