OPEC to Maintain Output Ceiling

While oil prices have dropped again this month, OPEC is reportedly holding expectations for stronger demand.

The Organization of the Petroleum Exporting Countries (OPEC) says it intends to continue its current output levels in order to defend its market share, Reuters reports.

While oil prices have dropped again this month, a number of OPEC delegates have reportedly said that they expect the drop to be short-lived and hold expectations for stronger future demand.

On Tuesday, Ali Saleh al-Omair, Kuwait's oil minister, said that producer countries expect stronger global economic growth to raise oil prices.

"It is not time for OPEC to change. Demand will be more than in the first half (of the year) although there is some uncertainty about the economy. The prices will remain around $60," said one Gulf OPEC delegate.

Another Gulf delegate insisted that "prices will not stay down forever," and argued that even if prices fall below $50 a barrel it is unlikely OPEC would lower its output ceiling, so long as the price fall is short-lived.

As of Wednesday last week Brent crude prices had fallen 10 percent so far in July.

"It does seem that the Saudi tactic of beating the U.S. shale oil producers is not being successful, but they probably will maintain it," said an OPEC official.

However, despite OPEC holding to its planned course, some OPEC countries may reportedly renew demands to cut supplies as a result of the price drop.

On July 14, Algeria's energy minister suggested that an extraordinary OPEC meeting could be called, with Iran said to lobbying for other OPEC members to curb supply to make way for a possible export rise.

While Iran is said to be intending to rapidly raise crude exports with lifted sanctions, Gulf OPEC delegates reportedly do not expect a significant volume rise before 2016 and are expecting higher global demand next year to mitigate the excess stock.

In June, OPEC said it would maintain its 30 million barrel per day output ceiling.