OPEC Unable to Agree on Output Limit

by Ship & Bunker News Team
Thursday November 19, 2015

A much-anticipated long-term strategy plan from the Organization of Petroleum Exporting Countries (OPEC) won't be presented to oil ministers at the organization's December 4 meeting in Vienna, because OPEC's board of governors could not agree on clauses such as curtailing output, Bloomberg reports.

Two OPEC delegates told BloombergBusiness that other clauses from some members that the governors disagreed on included setting production quotas and determining ways to maximize OPEC profit.

As a result, approval of the final draft plan will be postponed until the next board of governors meeting in 2016, at the earliest.

It was noted that Venezuela and Algeria, two OPEC members who are said the be the most impacted by the oil price slump, have repeatedly asked fellow members to curb output and support prices.

The policy of putting market share before price has seen chronically low oil prices pushed to their lowest since August, and caused bunker prices in some ports to fall below the 10-year lows witnessed during the summer.

The latest developments will do little to change the growing view that prices are set to remain low for some time.

Earlier this month, a leaked OPEC report revealed that the organization expects crude prices to remain under pressure through to 2019 and then reach $80 per barrel by 2020.

Based on current market conditions, that scenario would likely keep IFO380 under $400 per metric tonne (pmt) until at least the end of the decade.

The same OPEC report also revealed that Algeria and Iran are calling for a return of the group's quota system, which was dropped in 2011.