Stiff Iranian opposition to any attempt to rein in its oil production has left the Organization of the Petroleum Exporting Countries (OPEC) divided and unable to agree on a plan of action. A meeting on December 4 ended in disarray after Iran said it would not consider any production curbs until it restored output that has been scaled back for years as a result of Western economic sanctions.
Magnificant return of Iran to OPEC
Source: Iranian daily Ghanoon
The failure to reach any agreement on curbing global production, which currently exceeds global demand by about 2 million barrels a day and has left a glut of oil on world markets, put additional pressure on oil prices on December 4.
The price of Brent premium crude fell to around $43 a barrel in London futures trading, not far from a low last reached during the Great Recession in 2009.
OPEC Secretary-General Abdullah al-Badri said the cartel could not even agree on making routine projections for oil output next year because it could not predict how much oil Iran will add to the market as sanctions are withdrawn under a nuclear deal reached with world powers in July.
"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," he said at a news conference.
Iranian Oil Minister Bijan Zangeneh has said Iran's goal is to increase output by half a million barrels a day in early 2016, and eventually raise it by 1 million barrels, bringing Iran's daily total to around 3.8 million barrels a day. That would be close to presanctions levels of around 4 million barrels.
Badri tried to lessen the embarrassment of OPEC's divisions by saying the cartel's influence on market prices is as strong as ever -- an assertion that prompted an outburst of laughter from reporters and analysts in the conference room, Reuters reported.
OPEC's poorer members -- Venezuela, Ecuador, and Algeria -- had led calls at the meeting for a collective cut in production of as much as 5 percent to help boost prices and raise government revenues depleted by plummeting tax collections.
"Everyone is concerned about...the prices, no one is happy," said Iraqi Oil Minister Adil Abd al-Mahdi.
Iraq, like Iran, has plans to dramatically increase production in the future and was not willing to back proposals for a cut in production.
With reporting by Reuters and AFP
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