Crude oil prices have dropped after the Organization of the Petroleum Exporting Countries (OPEC) failed to agree on a production ceiling to cut oversupply.
In its 168th meeting held in Vienna, Austria, on 4 December 2015, OPEC failed to agree on output targets and did not even mention an output quota after a disagreement between Saudi Arabia and Iran.
Analysts said that that the cartel was sending a message to other producers in Russia and North America that it was ready to accept low oil prices in order to defend market share.
At its next meeting set for 2 June 2016 in Vienna, the group is expected to discuss a strategy on how to deal with new Iranian volumes, which is expected to hit market after sanctions are lifted.
OPEC’s output of more than 30 million bpd has compounded an oil glut and increased production from 0.5 million to two million bpd putting many producers under pressure.
The OPEC conference emphasised the importance of maintaining its energy dialogue with China, the European Union, the Russian Federation, and other industry participants and global organisations.
OPEC anticipates that the global economic growth will expand by 3.4% in 2016 compared to 3.1% in 2015.
Similarly, the block is expecting that non-OPEC supply is expected to drop in 2016, while the global demand for crude is expected to expand by 1.3 million barrels per day.
During the meeting, the oil cartel welcomed Indonesia as the 13th member of OPEC, seven years after suspending its membership.
Image: US crude traded at $39.63 a barrel, down 34 cents. Photo: courtesy of Victor Habbick/ FreeDigitalPhotos.net.