You are here

Opec rules out oil output cut despite price slump

Nigeria's Oil Minister and OPEC president Emmanuel Ibe Kachikwu (left) and OPEC secretary general Abdullah al-Badri address a news conference after a meeting of OPEC oil ministers in Vienna, Austria on Dec 4, 2015.

[VIENNA] The Organisation of the Petroleum Exporting Countries on Friday decided against cutting its oil output despite sliding prices and higher production expected from Iran.

Following a meeting of the cartel in Vienna, Opec president and Nigerian oil minister Emmanuel Ibe Kachikwu said a reduction "is not going to make much of an impact in the market".

Going into the meeting, Opec - whose members together pump out more than one third of world oil - has consistently struggled to keep production at a target of 30 million barrels per day.

The cartel is currently pumping out around 32 million barrels daily - a figure that is set to rise in coming months as Iran looks to pump out more crude and after Indonesia's return to the organization was confirmed Friday.

The cartel meanwhile published no figures on output in Friday's final communique.

"We cannot put a number now because Iran is coming, we don't know when Iran will come, and we will have to accommodate Iran one way or the other," said Opec Secretary General Abdullah el-Badri.

"We decided to postpone this decision to the next Opec meeting (in June) until the picture will be more clearer for us to decide on a number," he added.

Iran on Thursday said it would not bow to pressure for it to avoid increasing its production following the lifting of sanctions that had been imposed due to its disputed nuclear programme.

This despite slowing growth in global oil demand, largely because of weaker economic output in China, the world's biggest consumer of energy.

Despite oil prices plunging by more than 60 per cent in 18 months, Opec kingpin Saudi Arabia and the cartel's other Gulf state members are defying calls to reduce output - in a year-long strategy of attempting to preserve market share and fend off competition from non-Opec and world leading producers Russia and the United States.

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.

"We have said on more than one occasion that we are willing to cooperate with anyone that will help balance the market... with us," Saudi oil minister Ali al-Naimi told reporters gathered at Opec headquarters in Vienna.

Opec's poorer nations - notably Venezuela, Ecuador and Algeria - had led the calls for a cut to help boost prices and in turn their badly-hit revenues.

"Everyone is concerned about... the prices, no one is happy," said Iraq's oil minister Adil Abd Al-Mahdi.

On markets Friday, US oil benchmark West Texas Intermediate (WTI) for delivery in January was down US$1.04 at US$40.04 a barrel.

Brent North Sea crude for January fell 60 cents to US$43.24.

In June last year, crude had traded above US$100 a barrel, but has since plunged on a global supply glut, weak demand growth and a strong dollar.

Opec on Friday confirmed that Indonesia had returned to the cartel after a near seven-year absence, bringing the number of member countries to 13.

Indonesia's re-entry will "simply acknowledge the reclassification of Indonesian output from non-Opec to Opec production", said Julian Jessop, analyst at Capital Economics research group.

"It would not amount to an increase in overall global supply." Opec, whose members face pressure from cleaner fuel technologies, also had a word for the Paris climate summit.

Opec's final communique stated that "climate change, environmental protection and sustainable development are a major concern for us all".