VIENNA: Divided Organization of the Petroleum Exporting Countries (OPEC) ministers struggled to strike an agreement here Thursday (Friday in Manila) on tackling an oil supply glut, with Iran insisting that it plans to hike its own production early next year.
Going into Friday’s meeting of the OPEC, oil ministers said no deal had been reached on whether to cut the cartel’s oil output amid slumping crude prices.
“Nothing is decided, we are still discussing” among ourselves, Iraq’s oil minister Adil Abd Al-Mahdi told reporters after an informal gathering of OPEC members in Vienna.
Markets expect OPEC—whose 12 member nations from the Middle East, Africa and Latin America pump out about one third of the world’s oil—to leave its daily oil output ceiling at 30 million barrels at Friday’s meeting.
Nevertheless, it may still reach a last-minute deal to trim production in a bid to support prices and in turn producers’ revenues.
According to a survey by Bloomberg, OPEC production in November rose to 32.1 million barrels a day—more than 2.0 million about its target.
OPEC kingpin Saudi Arabia and other Gulf state members are defying calls to cut output despite tumbling oil prices—in a year-long strategy of attempting to preserve market share and fend off competition from oil extracted from North American shale rock.
Outside of OPEC, Russia alone pumped out 10.7 million barrels of oil a day in November, while on Thursday it again insisted that it would not be cutting back its own output to help the cartel.
OPEC’s over-production has meanwhile caused friction within the organization, with poorer members such as Venezuela suffering badly from a collapse in income and demanding a cut to the cartel’s overall ceiling.
Should OPEC surprise markets and agree to a reduction, Iran still plans to pump out additional crude from the beginning of 2016.
The Islamic republic’s oil minister on Thursday said Iran would not bow to pressure and avoid increasing its production following the lifting of sanctions that had been imposed due to its disputed nuclear program.
“We don’t accept any discussion about the increase of Iranian production after lifting the sanctions,” Iran’s Oil Minister Bijan Zanganeh told reporters on arriving in the Austrian capital.
“It’s our right” to pump out more crude, he added.
Zanganeh said the aim was to first increase output by half a million barrels a day in early 2016, eventually rising to one million barrels extra that would bring its daily total to around 3.8 million.
A global oversupply in crude has contributed heavily to oil prices plunging by more than 60 percent in about 18 months.
On Thursday, New York prices rebounded from heavy falls suffered a day earlier to reach around $40 a barrel—which compared with more than $100 in June last year.
“The price of oil has rebounded from five-year lows [Thursday] after a report indicated Saudi Arabia said it would back output cuts if they were supported by non-OPEC countries,” said Jasper Lawler, analyst at traders CMC Markets.
“The Saudi’s slight concession makes a cut at Friday’s meeting very unlikely since Russia,
the biggest non-OPEC oil producer is not yet on board, but does raise the possibility of it happening next year.”
The price situation could, meanwhile, worsen next year, when growth in global demand for crude slows as the allure of cheap oil fades, the International Energy Agency said last month.
Demand is being impacted in part by slowing economic output in China, the world’s biggest consumer of energy—and by a strong dollar.
Also on Friday, OPEC is set to approve Indonesia’s return to the organization following a six-year absence that had been triggered by southeast Asia’s largest economy becoming a net importer of oil.
Its return is seen as a way for the resource-rich country to access cheaper oil supplies as local demand soars while domestic production falls.