OPEC will stand by its decision not to cut crude output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said.
OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. Venezuela supports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. The group is due to meet again on June 5.
“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.
OPEC’s 12 members pumped 30.56 million barrels a day in November, exceeding their collective target for a sixth straight month, according to data compiled by Bloomberg. Saudi Arabia, Iraq and Kuwait this month deepened discounts on shipments to Asia, feeding speculation that they’re fighting for market share amid a glut fed by surging U.S. shale production. The Organization of Petroleum Exporting Countries supplies about 40 percent of the world’s oil.
Brent crude, a pricing benchmark for more than half of the world’s oil, slumped 2.9 percent to $61.85 a barrel in London on Dec. 12, for the lowest close since July 2009. Brent has tumbled 20 percent since Nov. 26, the day before OPEC decided to maintain production. U.S. West Texas Intermediate crude dropped 3.6 percent to $57.81 in New York, the least since May 2009.
The U.A.E. hasn’t been informed of any plan for an emergency meeting, Al-Mazrouei said. OPEC Secretary-General Abdalla El-Badri said, “we don’t know,” when asked at the same conference about the possibility of such a meeting.
An increase of about 6 million barrels a day in non-OPEC supply, together with speculation in oil markets, triggered the recent drop in prices, El-Badri said, without specifying dates for the higher output by producers outside the group such as the U.S. and Russia. Prices will rebound soon due to changes in the global economic cycle, he said, without giving details.
“We will not have a real picture about oil prices until the end of the first half of 2015,” El-Badri said. Price will have settled by the second half of next year, and OPEC will have a clear idea by then about “the required measures,” he said.
OPEC kept its target unchanged last month because the group was uncertain whether a cut ranging from 1 million to 1.5 million barrels a day would have boosted prices, El-Badri said. The group wasn’t seeking to put pressure on the U.S. or Russia by maintaining output, he said.
“Our expectation in OPEC is that after 2020, the oil industry in the U.S. will decline” due to the nation’s low reserves, he said. The U.S. won’t become self-sufficient in oil and will continue to depend on Middle Eastern supply, El-Badri said.
U.S. oil drillers last week idled the most rigs in almost two years as crude tumbled below $60 a barrel. Producers including ConocoPhillips have curbed spending, and the number of rigs is declining from a record 1,609, threatening to slow the shale-drilling boom that has propelled U.S. production to the highest level in three decades.