Gulf oil producers led by Saudi Arabia have won the case for keeping the Organization of the Petroleum Exporting Countries (OPEC) output unchanged, overriding calls from poorer members of the exporters’ group for action to halt a slide in crude prices. The decision is unpopular among other countries who wanted output to be reduced in order to raise the market prices. Saudi Arabia’s Oil Minister Ali Al-Naimi said it is a “right” move and a “great decision” not to cut production despite prices diving down to as low as $75 a barrel.
OPEC countries agreed to continue supplying the world with 30 million barrels per day till their next meeting scheduled for 5 June 2015. Countries like Iran and Venezuela are not happy with the deal although they can do little about it since they can’t afford to cut production.
Olivier Jakob from Petromatrix consultancy said keeping prices low could be considered as a strategic move geared towards slowing down development projects for shale oil in the U.S but it also be that Riyadh is “selling the idea that oil prices in the short term need to go lower, with a floor set at $60 per barrel, in order to have more stability in years ahead at $80 plus.”
Among the 12 members of the organization, some of them needed oil prices to increase in order to avoid important budget deficits. Oil prices have fallen by more than a third since June as increase production in North America from shale oil has overwhelmed demand at a time of sluggish global economic growth. Venezuela’s foreign minister said the U.S is producing shale “in a very, very bad manner” because “it is a disaster from the point of view of climate change and the environment.”