OPEC fails to agree on output … again
June 2, 2016, 3:00 pm

Iran the spoiler? Oil Minister Bijan Namdar Zangeneh says his country is not interested in caps on output as it emerges from decades of sanctions and seeks its share in global oil markets [Xinhua]

The ‘take-no-measures’ measure, however, failed to send energy markets into a significant downward spiral – as may have been the case nine months ago.

US benchmark West Texas Intermediate dropped 1.51 per cent to $48.27 on Thursday while Brent Crude slipped 1.3 per cent to $49.07 at press time shortly after markets opened in North America.

Most analysts had expected no consensus to emerge from the OPEC meeting in Vienna today. The oil cartel’s closing remarks made no mention of measures to be taken to boost prices but included a statement that the 13 members all pledged to work toward market stability.

Oil producer Saudi Arabia was said to have been reconsidering output ceilings – which it nixed last December as it proceeded to boost its production capacity – as a means to spur oil prices to increase.

But Iran, which is regaining its heavyweight status now that US sanctions have been removed, says an output ceiling is of no interest to its market strategies. It says any such move must be accompanied with a country quota system. This argument has support among some of the less powerful OPEC members such as Venezuela and Algeria.

Tensions are still frayed from the last time OPEC members met – in Doha with non-OPEC members such as Russia – when Iran failed to turn up at the forum and instead said it would not abide by any production cap.

The Saudis blame Iran for the failure of the Doha talks; Iran at the time had increased its output by about 500,000 barrels and was headed to a total post-sanctions increase of one million barrels.

Iran says producing and selling more oil is essential to reviving its sanctions-hit, cash-strapped economy.

Nevertheless, Saudi Arabia’s new oil minister Khalid al-Falih told Reuters that while the Kingdom wanted to elevate oil prices, which have slightly rebound in recent weeks passing the $50 mark at one point, it will not take any measures that will “shock the market”.

By the numbers, oil prices are doing better than six months ago but desperately low compared to the same time two years ago. In June 2014, oil prices hovered around $115.

Today, international benchmark Brent Crude is at a 55 per cent decrease from 2014, but a 78 per cent increase from February 2016 when it fell to about $26-27 a barrel.

The BRICS Post with inputs from Agencies