OPEC keeps taps open despite low crude price

(MENAFN- Arab News) VIENNA: OPEC again defied calls to cut output despite the low oil price extending its new strategy to preserve market share and fend off competition from the US shale energy boom.

The decision to maintain output levels made at a key production meeting in Vienna leaves the Organization of the Petroleum Exporting Countries' (OPEC) official collective target at 30 million barrels per day where it has stood for more than three and a half years.
'The ceiling is the same. You will be surprised how amicable the meeting was' Petroleum and Mineral Resources Minister Ali Al-Naimi told reporters after the gathering of the 12-nation oil producers' group that pumps one third of the world's crude.
The global oil market plagued with demand worries oversupply and booming US shale output collapsed 60 percent between June 2014 when West Texas Intermediate (WTI) crude stood at about $106 per barrel and late January when it hit a six-year low under $45.
Prices have since recovered but only to around $60 putting the budgets of many oil-producing nations under pressure while giving the battered global economy a much-needed fillip.
But OPEC which has traditionally defended price levels by cutting output if needed dramatically switched strategy last November when it opted to leave production unchanged despite a dramatic oil price collapse that slashed revenues for its members.
'There is a commitment from all the ministers that they will adhere' to the target OPEC Secretary-General Abdullah El-Badri said.
OPEC which comprises nations from Africa Latin America and the Middle East is actually pumping 31.2 million bpd due to increased supplies from Saudi Arabia and Iraq according to International Energy Agency data.
In response to Friday's decision oil prices edged higher having earlier fallen on speculation over a possible output hike.
Brent oil for delivery in July added just five cents to $62.08 per barrel in late afternoon London deals while New York's WTI for the same month also won five cents to $58.05.
'It was no great surprise that OPEC left its output target unchanged today' analysts at Capital Economics research group wrote in a report.
'Oil prices even ticked up a little on the news as late speculation of an increase in the target proved unfounded.'
Ministers had declared this week they would be happier with prices between $75 and $80 a barrel to boost revenues and help their public finances.
Angola Ecuador Iran Iraq and Venezuela have all appealed for higher prices that encourage investment.
But El-Badri said: 'The reality now is that we cannot have this $100 any more... we have to take an action.'
He insisted: 'The action we took in November was for the benefit of the rich and the poor member countries.'
Losses accelerated in November after OPEC's change in policy but analysts say the strategy has paid off as US shale oil producers have been squeezed and crude has recovered somewhat in recent months.
Analysts meanwhile fear the market could be further saturated with oil from Iran should Western sanctions be lifted in a nuclear deal with world powers intended to be completed by June 30.