Organization of Petroleum Exporting Countries OPEC Meeting not in favor of Oil Production cuts

Organization of Petroleum Exporting Countries (OPEC) failed to agree on oil production cap at the meeting on Friday with Iran even signaling an increased production.

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OPEC's secretary general Abdullah al-Badri at the conference play

OPEC's secretary general Abdullah al-Badri at the conference

(Reuters)
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Organization of Petroleum Exporting Countries (OPEC) failed to agree on oil production cap at the meeting on Friday with Iran even signaling an increased production.

At the 168 OPEC conference held in Vienna on Friday, 4 December, OPEC hadn’t mentioned of any production cuts of crude oil. Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions.  Saudi Arabia also said it didn’t feel obliged to cut production, which is running close to a record.

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We don’t expect OPEC to do anything,” Iran’s Oil Minister Bijan Namdar Zanganeh said on Friday.

According to al-Naimi, minister of Petroleum and mineral resources of Saudi Arabia, Saudi haven’t cut any investment. “Nothing has been curtailed. We have a responsibility to maintain our 12.5 million-barrels-a-day capacity.”

Oil prices have more than halved over the past 18 months to a fraction of what most OPEC members need to balance their budgets. Brent oil futures fell by 1 percent on Friday to trade around $43, only a few dollars off a six year low.

Many poorer OPEC members have said the group's largest producer was effectively twisting their arms, prompting the Saudi oil minister, Ali al-Naimi, to say he would listen to everyone this time.

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OPEC's secretary general Abdullah al-Badri said OPEC could not agree on any figures because it could not predict how much oil Iran would add to the market next year, as sanctions are withdrawn under a deal reached six months ago with world powers over its nuclear program.

"Now the Viennese OPEC family gathering is over, the music has stopped and they're sweeping up, but nothing has changed - the oil production remains unchanged, the oil production quota remains divorced from real-world oil production, and the slightly dysfunctional OPEC family - like most families - has gone its separate ways," said Christopher Wheaton, energy fund manager and analyst at Allianz Global Investors.

With these recent developments there is a prediction of heavy price wars in the near future with more oil pumped into the market.

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