EMEA News
Oil Prices Collapse as OPEC Makes No Move to Cut Output
Oil prices today collapsed as the Organization of Petroleum Exporting Countries (OPEC) made no move to lower its 30-million-barrel-per-day production ceiling despite plunging oil prices and a supply gut, Bloomberg reports.
The news pushed West Texas Intermediate (WTI) prices as low as $67.75 per barrel, as Brent slipped under $75 per barrel.
The decision was announced today by Saudi Arabian Oil Minister Ali Al-Naimi, with OPEC having taken no action to control oil prices despite Venezuela having vocally pushed for a cut in production.
The organisation was said to have considered a cut of five percent in output.
Iranian Oil Minister Bijan Namdar Zanganeh said that although he wasn't angry with the situation, the decision was ultimately "not in line with what we wanted."
Harry Tchilinguirian, head of commodity markets at BNP Paribas SA, says the situation means OPEC has lost its influence on the price of oil.
"OPEC has chosen to abdicate its role as a swing producer, leaving it to the market to decide what the oil price should be," he said.
"It wouldn't be surprising if Brent starts testing $70."
Oil futures have declined more than they have in the past three years on the backs of higher than normal production from the U.S., which failed to be offset by political turmoil in either the Ukraine or the Middle East.
"The change is that it's no longer Saudi Arabia and OPEC that are going to be managing the supply side of the market," Michael Wittner, head of oil market research at Societe Generale SA.
"That is so fundamental, it is hard to overstate."
It was predicted last month that OPEC's inaction would be the likely decision.
