On Friday, June 5, 2015, the Organization of the Petroleum Exporting (OPEC) decided to maintain its production levels at 30 million barrels a day for at least another six months, Saudi Arabia’s Oil Minister Ali Al-Naimi told reporters in Vienna. (Source: The Wall Street Journal, June 5, 2015.)
The 167th meeting of the conference of OPEC was held in Vienna, Austria. The meeting took place under the chairmanship of its alternate President, H.E. Dr. Mohammed Bin Saleh Al Sada, Minister of Energy and Industry of Qatar and head of its delegation. OPEC represents 12 of the top oil-producing countries: Saudi Arabia, Iran, Venezuela, Iraq, Kuwait, Libya, Nigeria, Qatar, Angola, Algeria, the United Arab Emirates, and Ecuador. (Source: OPEC, June 5, 2015.)
The conference noted that the market volatility and challenges in the global oil industry caused by oversupply and speculation have now abated. Oil prices tanked 60% after OPEC announced it was not going to cut its output last summer. While oil prices have rebounded slightly, they are still down 45% over last June’s highs.
The members reviewed the oil market, in particular the supply and demand, and provided projections for the second half of 2015.
On the demand side, the conference noted that the world oil demand is expected to increase in the second half of 2015 and 2016 with growth driven by non-OECD countries. On December 14, 1960, 20 countries, including Austria, Canada, and the United States, originally signed the Convention of the Organization for Economic Co-operation and Development (OECD). Since then, 14 other countries, such as Israel, Chile, and Slovenia, have joined the organization. (Source: OECD, last accessed June 5, 2015.)
On the supply side, non-OPEC growth is forecasted to be just below 700,000 barrels per day, which is only around one-third of the growth experienced in 2014.
While OPEC’s meeting came only three weeks before the crucial deadline for the nuclear deal between Iran and P5+1 (United States, Russia, China, United Kingdom, and France, plus Germany), Iran’s oil minister Zanganeh said his nation would increase production by one million barrels a day within months of sanctions lifting.
Sanctions currently limit the ability to sell oil, and have cut Iran’s exports to just over a million barrels a day. It remains unclear how much and how quickly Iran could ramp up production. Sanctions were imposed on Iran by the U.S. and the international community in 2010, targeting Iran’s economic activities.