Oil Prices Won’t Budge Ahead Of OPEC Meeting

Published at 09:33AM - 02/06/16

Crude oil prices showed no evolution in early Asian trade today, sending mixed signals just before an Organisation of Petroleum Exporting Countries (OPEC) meeting in Vienna today.

At the meeting, the group was expected to discuss a production ceiling, which has been backed by Saudi Arabia. However, Iran has rejected the proposal.

“One of our main ideas is to have country quotas, but I don’t think we can reach an agreement on this subject at this meeting”, Iranian Oil Minister Bijan Zanganeh told AFP in Vienna this morning.

Oil Prices Won’t Budge Ahead Of OPEC Meeting

Until December 2015, OPEC had a production ceiling on the whole group’s output of 30 million barrels per day (bpd). Following the group’s decision to cancel the production limit in December, crude prices have fallen to a 13-year low within weeks.

Now, most analysts are saying that the cartel should be sticking to its strategy of not changing production, also due to a rebound in prices in recent months.

According to Zanganeh, a production cap would be “no benefit” for Iran, which has only made a return to oil markets in the beginning of this year, after international sanctions associated to its nuclear programme were lifted.

OPEC Meeting Will Choose A New Secretary General

The minister added that this meeting should focus especially on the choice of a new OPEC secretary general to replace Abdalla El-Badri of Libya.

OPEC Secretary General Abdallah Salem el-Badri
OPEC Secretary General Abdallah Salem el-Badri

US crude data is to be released later today, after the start of the meeting. For now, the future of oil prices seems to be set on factors such as Saudi Arabia’s decision to raise production, a UK vote to leave the European Union, the FX market and US elections.

In the meantime, the impending resumption of oil production in Canada could bring more pressure on prices, although the current supply crisis in Nigeria could have an adverse impact on global supply.

OPEC Analysis

To See Analysis On OPEC’s Meeting By Offshore Post’s Business Journalist Declan Curry, Click Here.