VIENNA (Reuters) - OPEC is set to carry on pumping oil nearly flat-out for months more, content that last year’s shock market therapy has revived demand and knocked back growing competition.
With oil prices having stabilised at around $65 a barrel, some $20 above their January lows, there’s little appetite within the Organization of the Petroleum Exporting Countries to modify production limits or address Iran’s request to give it more room in the market as sanctions ease.
“There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged,” a senior Gulf OPEC delegate told Reuters late on Tuesday after an informal meeting of the four core Gulf Arab OPEC members earlier in the day.
Iraqi oil minister Adel Abdel Mahdi said there was “optimism and general acceptance with the current situation”.
The group meets on Friday following a two-day seminar featuring the chief executives of the world’s biggest energy groups, including BP (BP.L) and Exxon (XOM.N), companies whose fortunes have been abruptly altered by OPEC’s decision to abandon efforts aimed at sustaining oil prices at more than $100 a barrel in favour of defending market share.
“Nobody wants to rock the boat,” the Gulf source said. “The meeting is expected to be smooth sailing.”
OPEC Secretary-General Abdullah al-Badri said on Wednesday that it would likely be a brief meeting.
“Everything is very clear,” Badri said.
That marks a change in tone from OPEC’s last meeting in November 2014, when Venezuela and others mounted an unsuccessful bid to convince Saudi Arabia and its Gulf allies to tighten the taps on supply.
Instead, Saudi Arabia laid out its new laissez faire approach, saying it will no longer consider cutting output without the cooperation of non-OPEC producers such as Russia. This time, calls for collaboration have been muted as most ministers look forward to a more balanced second half.
“You can see that I’m not stressed, I’m happy,” Saudi oil minister Ali al-Naimi said on Monday.
OPEC members are producing more than 1 million barrels per day (bpd) above the group’s collective ceiling of 30 million bpd, with Saudi output at its highest in at least three decades, a Reuters survey showed, leaving the group little room to pump more. [O/POLL]
There may still be some choppy moments. Iran is seeking to clear space for its gradual return to the oil market after years in which Western sanctions halved its oil exports to as little as 1 million bpd.
“If OPEC members want to keep prices at the same level, we expect them to make room for Iranian oil,” oil minister Bijan Zanganeh was quoted as saying by Shana news agency.
But he told an OPEC seminar in Vienna he was confident that other producers would “coordinate and consider” Iran’s return, which would “not have a negative impact” on the market.
While Zanganeh said Iran would be pumping another 500,000 bpd within a month of lifting sanctions and up to 1 million bpd within six or seven months, most analysts believe it will be months or up to a year for any significant increase to occur.
That’s even if Iran and world powers meet a June 30 deadline for finalising a pact on curbing Tehran’s nuclear program.
“Due to heightened uncertainty with an (Iran nuclear) deal, we think OPEC is likely to take a wait-and-see approach to the prospect of additional oil,” analysts at Barclays wrote.
Some analysts, including those at Morgan Stanley, have raised the remote possibility that OPEC might surprise the market by increasing the output ceiling. Some of OPEC’s 12 members have dismissed that option.
Additional reporting by Rania El Gamal and Dmitri Zhdannikov in Vienna, Sam Wilkins in Dubai; Writing by Jonathan Leff; Editing by Dale Hudson