Oil Price Hits $50 Despite OPEC

Published at 03:18PM - 03/06/16

The price of crude oil broke the US$50 mark again yesterday and remained marginally above this level, despite the lack of resolutions during the meeting of the Organisation of Petroleum Exporting Countries (OPEC).

The ministerial meeting in Vienna failed to reach an agreement on output targets, with Iran refusing to support a plan by Saudi Arabia and others to freeze crude production.

“Supply and demand is converging and oil and [refined] product stock levels in the OECD have recently shown relative moderation”, OPEC said in a statement at the end of the meeting.

Oil Price Hits $50 Despite OPEC

OPEC added that the Group’s members were committed to a “stable and balanced oil market”, pointing out that crude prices had risen by 80% since its last summit and that the main goal of the gathering had been achieved – choosing a new secretary general.

OPEC decided to unanimously appoint Nigeria’s Mohammed Barkindo as the new head of the cartel despite years of uncertainty over this decision.

OPEC Secretary General Mohammed Barkindo (c)
OPEC Secretary General Mohammed Barkindo (c)

Barkindo will thus replace Libya’s Abdalla El-Badri, whose tenure expired in 2012, but who stayed in power due to the lack of consensus within OPEC on who could be appointed successor.

Saudi’s Intentions Blocked By Iran

According to Saudi Arabia’s new energy minister, Khalid al-Falih, the country had been pushing for “coordinated action” to freeze production.

However, Iran refused to cooperate and continued to insist on a production increase to regain the market share it had lost as a result of the sanctions only lifted this January.

Speaking after the meeting, Saudi Arabia said it would not flood the market with a production rise. “We will be very gentle in our approach and make sure we don’t shock the market in any way”, the minister said.

The recent decline in global supply is attributed to factors such as the major wildfire in Canada, militant attacks in Nigeria and the economic and political crisis in Venezuela.