The price of Brent crude dropped 1.3% or 63 cents to 49.09 USA dollars a barrel, after ministers ended the meeting in Vienna without an output policy and remained at odds over the best way to stabilise the market.
More immediately, Saudi Arabia is at odds with Iran, its longtime OPEC ally that is ramping up production to pre-sanctions levels despite ample supply.
The Barclays oil analyst Miswin Mahesh said the rivalry between Saudi Arabia and Iran and their battle for market share – mainly in Asia – will be a “recurring theme” this year that he forecasts will mean lower prices in the fourth quarter before broader market forces continue the recovery next year.
OPEC refrained from changing its oil output policy on Thursday, meaning the organization failed to agree on a new production ceiling, an OPEC delegate told Reuters.
The oil cartel’s closing remarks made no mention of measures to be taken to boost prices but included a statement that the 13 members all pledged to work toward market stability.
One idea was to abandon a firm production target.
Moreover, data showed gasoline stocks fell by 1.5 million barrels, while distillate fuel inventories were down 1.3 million barrels. The ministers are meeting in Vienna.
Reflecting its stance, Iran did not even show up at a meeting in April between OPEC members and outside producers attempting to agree on a joint output freeze to push prices higher.
Before Thursday’s OPEC meeting, Radio Sputnik sat down with Justin Dargin, Global Energy Scholar at the University of Oxford to discuss the fracturing of OPEC and the kingdom’s plans to corner oil energy markets. Saudi Arabia wanted to limit output in order to underpin crude on global markets, but for both financial and political reasons there was never the remotest possibility that Iran would agree.
Qatar’s energy minister expressed confidence that the rebalancing in the market has put a bottom beneath the price of oil, which has almost doubled from $26 a barrel in mid-February to $50 a barrel last week.
On the New York Mercantile Exchange, July West Texas Intermediate crude fell by 72 cents, or 1.5%, to $48.29 a barrel, with prices moving lower for a fifth straight session and set to settle at their lowest level in more than a week.
Oil prices dipped in Asia Wednesday as traders cautiously await the results of the OPEC meeting this week.
Zanganeh said he supported a candidate from Nigeria for the post of OPEC secretary-general, which could emerge as a rare compromise within the organization if Riyadh also backs the appointment. “The market is rebalancing as we speak”, said Khaled al-Falih said at the start of the bi-annual gathering. That would have been down from 32.77 million barrels now.