Business World

Sunday 25 September 2016

Opec fails to agree a deal on oil production

Grant Smith and Wael Mahdi

Published 03/06/2016 | 02:30

Saudi Arabia's Energy Minister Khalid al-Falih talks to journalists before a meeting of Opec oil ministers in Vienna
Saudi Arabia's Energy Minister Khalid al-Falih talks to journalists before a meeting of Opec oil ministers in Vienna

OPEC will stick to its policy of unfettered production after members failed to agree on a new output ceiling, but ministers were united in their optimism that global oil markets are improving.

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While crude prices dipped after yesterday's meeting in Vienna, there was little of the rancour that punctuated last December's summit.

The group was also able to appoint a new secretary-general - Nigeria's Mohammed Barkindo - something it couldn't agree on last year.

All members see the same market fundamentals and have been "highly cooperative", new Saudi Oil Minister Khalid Al-Falih told reporters.

Iran's Bijan Namdar Zanganeh reported "very good unity", while his Nigerian counterpart said relations had improved "substantially" and even Venezuela - a strong supporter of freezing output - said the meeting was "very positive".

Saudi Arabia had floated the idea of restoring a group production ceiling though members decided it wasn't necessary at this stage.

Opec needs more time to come up with an output cap, outgoing secretary-general Abdalla El-Badri said after the meeting, adding that it's hard to find a target when Iranian production is rising and significant Libyan volumes are halted.

"There was far less animosity between those players who did not necessarily see eye-to-eye in the last few meetings," said Amrita Sen, chief oil analyst at consultant Energy Aspects.

"The fact that the group managed to elect a new secretary- general after so many failed attempts also points towards a small measure of co-operation."

Mr Barkindo, who was acting head of Opec in 2006 and previously ran Nigerian National Petroleum, will assume the top job on August 1.

Yesterday's summit follows a recovery in oil to almost $50 a barrel from below $30 in January after depressed prices took their toll on supplies. That suggests Opec's Saudi-led decision in 2014 to maintain output amid a global glut is finally paying off, with higher-cost producers cutting back. (Bloomberg)

Irish Independent

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