The 12 nation oil group OPEC agreed to maintain its policy of combined production for another six months on Friday as some countries, including Iran look to increase their exports, prompting the emergence of warnings in the oil market that prices will fall even further. However, the possibility of a glut in the oil market did not lead the organization to change its daily output of 30 million barrels.
The meeting was concluded with no apparent dissent, while Saudi Arabian Oil Minister Ali Al-Naimi said OPEC had rolled over its current output ceiling, renewing support for the shock market treatment they prepared earlier last year.
After hitting a six-year low of $45 per barrel in January, oil prices rebounded more than a third in the following months, leading official to meet in Vienna with little reason to change their strategy.
Upon the decision oil prices rose by nearly $1 per barrel, gaining some of this week’s losses on news that the oil group had not raised its production ceiling to match current output levels that are much higher, inline with expectations.
However, Friday’s decision raises questions set to arise in the coming months as Iran and Libya prepare to reopen their taps after halted production in the past few years.
Iranian Oil Minister Bijan Zanganeh promised to pressure the group for assurances that other members would give Tehran room to add around 1 million barrels a day of supply after Western sanctions will be eased.
According to analysts, when Iran’s production starts, the matter will settle itself. Since it’s still unclear when Tehran will get relief from sanctions and sell more crude, many do not expect Iran to start production until 2016.
On the other hand Libya, suffering from a civil war, is looking into doubling its production to 1 million barrels per day by September if key ports resume working. However, previous efforts have failed to sustain a recovery in shipments.
It was not clear whether the organisation agreed to anything on Indonesia’s request to rejoin the group after an over six year interval in its membership. A net oil importer, Indonesia hopes to have better dialogue between producers and consumers.
OPEC will meet again on December 4.