Venezuela’s embattled foreign minister, Rafael Ramirez, criticised US frackers as he arrived at the Opec meeting, suggesting they should be reined in: “The US is producing in a very, very bad manner. OPEC is already producing almost one million barrels a day more than its stated 30m target. If it had cut by 500,000 barrels a day it would not have been enough and it had cut by 1m enforcing it (on its members) would be very tricky.” “If it does not cut it brings up arguments about what is OPEC for. “The group’s credibility is definitely under the spotlight,” said Miswin Mahesh, oil analyst at Barclays Capital in London. We want to see how the price reacts (to OPEC maintaining output levels).”īut the decision not to cut output for at least six months was viewed by analysts as an illustration of OPEC’s weakness - that it was unable to find a unified solution to the problems posed by rival oil supplies from the US shale fields. He went on: “The (global oil) price decline does not mean we should rush to do something.We don’t want to panic. “My ministers have agreed and are happy so I am happy, he said after the meeting in Vienna, where OPEC’s secretariat is based. He insisted that there was unity between all the cartel members, even though the Venezuelan oil minister stormed out of the meeting in protest. Prices have fallen due to increased US shale production and faltering demand as growth slows in China, Europe and emerging markets.Ībdalla El-Badri, the Opec secretary-general, put on a brave face to hide the split between rich nations such as Saudi Arabia, which want to hold prices, and others such as cash-strapped Venezuela which are desperate for output cuts.
Prior to a crunch meeting at its Vienna headquarters, OPEC was under under huge pressure from some members to reduce output in a bid to counter the five month slide in Brent blend prices from $115. But cheaper fuel will also lower the UK inflation rate, which at 1.3% is already well below the Bank of England’s target rate of 2%. Lower prices have already led to lower petrol and diesel bills for motorists and the transport sector which should feed through into manufacturing. Norway, an important oil and gas producer outside OPEC, saw its Krona currency hit a five year low against the dollar while Shell and BP saw their shares battered. There are now predictions that the price of Brent blend could fall to as low as $60, which would be disastrous for countries with high producing costs and economies dependent on oil and gas, such as Russia and Iran. The reduced cost of energy - prices are now down 37% since the summer - should be a boost to British consumers and the wider economy, but experts warned the North Sea oil industry is now facing a slump in investment and major job cuts.
Oil prices have crashed to a new four-year low, below $72 per barrel, after a major split inside Opec forced the cartel to hold production at current levels rather than make cuts to try to turn the market around.