Saudi Arabian Oil Minister Ali Al-Naimi talks to journalists during the OPEC seminar ahead of an OPEC meeting in Vienna, Austria, on June 3, 2015. (Reuters/Leonhard Foeger)
Vienna, Asharq Al-Awsat—OPEC countries will maintain their collective oil production output for the foreseeable future, officials from the organization said on Tuesday, maintaining that OPEC’s current strategy has helped stabilize the global oil market this year.
Speaking on the sidelines of an OPEC seminar in Vienna, officials from the organization told Asharq Al-Awsat it was highly unlikely OPEC would change its current strategy, in order not to put pressure on prices during the second half of the year.
Prices dropped to their lowest levels in years in late 2014 and early 2015, on the back of a heavily oversupplied market due to the US shale oil production boom and tepid demand from European countries.
OPEC defied predictions in November 2014 by keeping its production ceiling of 31 million bpd steady. Observers had expected the global cartel to lower its collective output in a bid to stoke global demand and eventually drive up prices, but OPEC said it wanted to allow the market to recover naturally.
Prices plummeted some 60 percent since last June after hitting highs of 115 US dollars per barrel just months earlier, eventually falling towards the 40-dollar mark earlier this year.
But prices have since stabilized to around 65 dollars a barrel, with OPEC officials telling Asharq Al-Awsat they are confident prices will reach the 70-dollar mark and stabilize at that level in early 2016.
Speaking to reporters at the seminar, Iraq’s Oil Minister Adel Abdul Mahdi maintained that OPEC’s strategy of keeping production stable and seeking to maintain individual members’ market shares—instead of attempting to drive up prices above 100 dollars again by lowering production—has paid off.
According to AFP, Saudi Arabia’s oil minister echoed Abdul Mahdi’s view, telling reporters, “Demand is picking up. Supply is slowing. This is a fact. The market is stabilizing.”
The two-day seminar comes ahead of meetings between OPEC member representatives and the chief executives of some of the world’s biggest energy companies.
Many of these companies, including BP and Exxon Mobil, favor the alternative strategy of pushing oil prices above 100 dollars a barrel, after sustaining lower profit margins following the price slump last year.