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 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 Dec. 4, Naimi said.
With oil prices having rebounded by more than a third after hitting
a six-year low of $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 U.S. shale boom.
"You'll be surprised how amicable the meeting was," a visibly
pleased Naimi told reporters after the meeting.
Oil prices rose by nearly $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.
Friday'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 (bpd) 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 told Reuters. 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.
Libya, still afflicted by a crippling civil war, hopes to double
production to some 1 million bpd by September if key ports resume
working, but past efforts have failed to deliver a sustained
recovery in shipments.
U.S. oil <CLc1> is on track for its first weekly decline since March
as traders weigh deteriorating physical market conditions. But
prices are still $15 off their lows, and some analysts see further
gains ahead.
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"The markets are moving in OPEC’s favour," said Dr. Gary Ross,
executive chairman of PIRA Energy Group. "Prices are stimulating
robust demand growth and slowing capex. This was the objective of
the Saudi strategy and it’s working."
OPEC Secretary-General Abdullah al-Badri, speaking to reporters
after the meeting, said he saw the oil market as "very positive".
"The economy is growing, demand is growing. We see non-OPEC supply
is not growing as in the past," Badri said.
DON'T RAISE THE ROOF
OPEC output has exceeded the group's 30 million bpd ceiling for most
of the past year, reaching 31.2 million bpd in May, its highest in
three years, according to a Reuters survey.
Notably absent from this week's agenda were efforts to push for
output constraints - even from hawks such as Venezuela, which faces
deepening budget woes at prices below $100 per barrel.
While oil ministers have maintained a relentlessly upbeat attitude
this week, some analysts see dark clouds gathering.
The U.S. tight oil industry has been more resilient than many had
expected, with falling costs helping sustain the revolution and
possibly setting up another downward spiral.
"Balances show we are oversupplied and OPEC is in pedal-to-the-metal
mode," said Bob McNally, founder and president of Washington-based
consultancy The Rapidan Group. He said Brent crude could fall back
to $50 a barrel.
(Additional reporting by Rania El Gamal, Reem Shamseddine and Shadia
Nasralla; Writing by Jonathan Leff; Editing by Dale Hudson)
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