OPEC not to reduce output for 6 months
Print Edition
OIL group OPEC agreed to stick by its policy of unconstrained output for another six months yesterday, 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 Arabian oil minister 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 the world’s top supplier said it would no longer cut output to keep prices high.
The Organization of the Petroleum Exporting Countries will meet again on December 4, Naimi said.
With oil prices having rebounded by more than a third after hitting a six-year low of US$45 a 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.
Amicable meeting
“You’ll be surprised how amicable the meeting was,” a visibly pleased Naimi said after the meeting.
Oil prices rose by nearly US$1 a barrel after the decision, paring some of this week’s losses on news that OPEC had not raised its output ceiling to match current output levels that are much higher, as a handful of analysts had suggested.
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 oil minister Bijan Zanganeh had 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. But most delegates saw little reason for Tehran to pick a fight now.
“When the production comes, this matter will settle itself,” one OPEC delegate said.
But that may not occur until 2016, according to many analysts who question how quickly Tehran will win relief from sanctions and be allowed to sell more crude.
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