Despite many financial strains resulting on the policy’s chief architect, Saudi Arabia, alarming weaker members fearing for prices to slump towards $20, the OPEC is determined to keep up the the production of oil, just the same.
According to Reuters, any sort of policy U-turn would be possible only if large producers outside the exporters’ group, notably Russia, were to join coordinated output cuts. While Moscow may consult OPEC oil ministers before their six-monthly meeting next week, the chances of it helping to halt the price slide remain slim.
A major OPEC producer delegate, said that, OPEC will not cut alone.
OPEC made a decision in November 2014, of pumping up more oil, and defend its market share against surging rival suppliers. They proclaimed crude oil traded near $65 per barrel, six months later, it hit $45, down from as much as $115 in the middle of last year.
Some of the member states are speaking about a return to oil worth $20 by the end of millennium. Pointed towards Iranian confidence, the economy is likely to be lifted up by the end of year.
Venezuelan oil minister Eulogio del Pino said, on Sunday, “Iran is announcing its production is going to increase as soon as they lift the sanctions and we need to do something. We (OPEC) cannot allow going into a war of prices. We need to stabilise the market.”
Analysts doubt that Iranian sanctions will be lifted before next spring.
It has been said, through sources, that, the collapse in prices has only partly achieved the goals of OPEC. It has curbed growth in supplies of U.S. shale oil, that is quite expensive for production. Non-OPEC supply is expected to depreciate in almost a decade, next year.
It has been observed that oil is still being produced, much more than is actually required, and Russia’s output is setting new records. Infact, Saudi Arabian finances that led to a shift in the policy of OPEC are under strain.