OPEC is calling on all oil-producing countries, even those outside the cartel like the U.S., to work together to tackle the global oversupply of oil and bring prices of the commodity back up.
OPEC Secretary-General Abdullah El-Badri said at a conference Jan. 25 in London that non-OPEC oil producers contributed the majority of the additional supply in the last year. Russia is one non-OPEC member country that has reportedly refused to work with the cartel to reduce oil supplies.
“It is well documented that the cycle on this occasion has been supply-driven, with most of the supply increases in recent years coming from high-cost production,” El-Badri’s opening address for the London conference stated. “Until 2015, all of the supply growth since 2008 has come from non-OPEC countries. Between 2008 and 2014, overall non-OPEC growth was more than 6 million barrels a day, while OPEC actually saw a contraction.”
A Platts report out last week showed OPEC oil production fell 130,000 barrels per day in December to reach 32.28 million b/d compared with the 32.41 million b/d in November. While production was down last month, Platts analysts still said there is cause for concern. Despite falling oil prices, Platts reported Saudi Arabian oil production still remains above 10 million b/d and the government’s latest budget is based on oil production of 10.2 billion b/d and and oil export price of $40.30 per barrel.
Iran is also ramping up oil production. The country produced 10,000 more b/d in December than November, Platts reported. Iranian oil output is only expected to increase as well after the U.S. and European nations lifted oil and financial sanctions on the country earlier this month. Iran said it plans to export 2 million b/d of oil within the next six months.
At the Jan. 25 conference in London, Qatar's Energy Minister Mohammed Al-Sada said while “one more downturn cycle of oil price” is expected, the market will eventually balance itself as current prices are not sustainable. Oil prices sank to below $30 a barrel this month, reaching 13-year lows.
OPEC’s El-Badri also said there was still room for optimism and supply and demand will eventually begin to correct themselves at some point in 2016.
The U.S., which is not a member of OPEC, is also expected to reduce oil output this year. Goldman Sachs predicts the U.S. to reduce oil production by 95,000 b/d in 2016.