The 12-nation OPEC oil cartel left its 30-mn bpd oil production target on hold as calls from smaller producers such as Iran, Venezuela and Algeria for a 5% output cut was outweighed by Saudi Arabia and other GCC’s oil producers stance for an on-hold decision.
The GCC states, which have ample liquidity buffers to withstand the impact of sharply falling crude oil prices, thus seem to prefer that oil prices decline to around $60-70 per barrel in the near term before eventually recovering to $80 a barrel at a later stage.
OPEC said it reviewed the oil market outlook, mainly supply/demand projections for the first, second, third and fourth quarters of 2015, with emphasis on the first half of the year. OPEC also assessed forecasts for the world economic outlook, underscoring that the global economic recovery was continuing, “albeit very slowly and unevenly spread, with growth forecast at 3.2% for 2014 and 3.6% for 2015.”
The oil cartel also noted, that although world oil demand is expected to increase in 2015, it will be again mitigated by the projected increase of 1.36 mb/d in non-OPEC supply. The increase in oil and product stock levels in OECD countries, “where days of forward cover are comfortably above the five-year average, coupled with the on-going rise in non-OECD inventories, are indications of an extremely well-supplied market,” OPEC said in its statement.
OPEC members likewise confirmed their readiness to react to developments which could have an adverse impact on the maintenance of an orderly and balanced oil market, thus, leaving the door open for a production cut in case oil prices drop to dangerous levels over the next months.
The next OPEC meeting will take place also in Vienna on June 5, 2015
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