OPEC meet ends without output deal

After months of speculation, OPEC decided on Thursday to maintain its current production policy, while no consensus was reached on a new output ceiling after the cartel concluded its meeting in Vienna.

The producer group cited the recent recovery in oil prices, which had risen 80 percent since the last meeting in December, as well as signs that suggested a global supply glut may be easing.

“Given the current market conditions, the Secretariat should continue to closely monitor developments in the coming months, and if necessary recommend to member countries to meet again and suggest further measures according to prevailing market conditions,” OPEC said in a statement.

Oil prices tumbled following the decision, with Brent crude falling 1.5 percent to $48.97 per barrel just minutes after the meeting concluded.

Despite the lack of an output quota, cartel’s appointment of a new secretary general from Nigeria, was seen as a positive step, analysts told Argaam.

“This seems to be a start of a dialogue process where OPEC members seem to be agreeing on certain agenda,” Abhishek Deshpande, chief oil market analyst at Natixis SA said, adding that despite an immediate drop in oil prices, crude markets would eventually rise again and also find support from further supply disruptions.

For the time being, Iran is expected to continue to ramp up production until pre-sanction levels are reached.

“We will see another 200-300k b/d further additions in the market from Iran which should take its production to 3.6-3.7mn b/d. But that's pretty much it in the near term due to lack of investments in the past,” he explained.

Saudi Arabia is also seen to boost output in the near term; however, any increases are likely to be seasonal and aimed at meeting high demand  in the kingdom during the summer months.

“The Saudi oil minister made it very clear the kingdom has no plans to shock the market by increasing production sharply,” Richard Mallinson, geopolitical risk analyst at the London-based Energy Aspects, explained.

“We will see the normal season increase to meet domestic demand, but his statements will hopefully have allayed the fears in the market that Saudi Arabia might be about to raise output to 11 mb/d,” Mallinson added.

Write to Joumana Saad at joumana.saad@argaamplus.com