OPEC meeting ends in acrimony

OPEC will stick with its policy of not constraining output and has all but abandoned its official production target at its semi-annual meeting, risking a further drop in oil prices that are currently close to six-year lows.

After a marathon seven-hour session that ended in chaotic scenes outside the OPEC secretariat in Vienna, the only agreement reached by the cartel members was to meet again in June.

The group’s official communiqué made no mention of its existing output target of 30m barrels a day, saying only that it would continue to “closely monitor developments’’.

“We cannot put a [production] number on it now,” said Abdalla El-Badri, OPEC secretary-general, after the meeting. “Iran is coming back. So we decided to postpone the decision until the next OPEC meeting, when the picture will be clearer.”

Reports earlier in the day claimed that OPEC would raise its production ceiling to 31.5m barrels a day. But it later transpired that this was the level OPEC ministers had pegged as the group’s current output level. Although delegates say raising the ceiling was discussed, it did not result in an official target increase. Analysts say production is even higher, adding that targets are meaningless if individual country quotas are not adhered to.

The group has been increasing output since November last year when Saudi Arabia led the cartel in resisting calls to cut output in the face of rising supplies from rival high cost producers.

That decision upended the oil market and has seen prices slump by more than 40 per cent to levels last seen in the aftermath of the financial crisis. Brent, the international oil marker, fell 1.7 per cent to $43.11 a barrel after the meeting, while US crude oil dropped below $40 a barrel.

“I didn’t have any other expectation,” said Iran’s oil minister Bijan Namdar Zangeneh as he left the meeting. “We didn’t decide to do anything. I hope at the next meeting we can reach agreement.”

Expectations of higher exports and production from Iran next year when sanctions are expected to be lifted are one reason why the cartel has not been able to reach an agreement on an output target.

Earlier in the day, Mr Zangeneh said limiting Iran’s output was “not a matter of negotiation”.

Divisions within the producers’ group were evident at the pre-meeting press conference.