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OPEC sticks to oil output levels as global glut grows

Security staff pushes back the media during the start of a meeting of OPEC oil ministers in Vienna

By Rania El Gamal, Alex Lawler and Reem Shamseddine

OPEC maintained its policy of pumping near-record volumes of oil at a meeting on Friday, according to sources at the group, taking no steps to reduce one of the worst crude gluts in history which has driven down prices.

The group, which produces a third of global oil, decided to increase its collective output ceiling to 31.5 million barrels per day (bpd) from the previous 30 million, the two OPEC sources said, in a move that effectively acknowledged that members are pumping well in excess of the current ceiling.

Benchmark Brent oil futures – which are near a six-year low – lost nearly $2 on the news, falling 2 per cent to below $43 a barrel by 1420 GMT

It was not immediately clear if rejoining member Indonesia, which produces 0.9 million bpd, was included in the new ceiling. Either way, the decision failed to address growing global supply.

The poorer members of the Organization of the Petroleum Exporting Countries’ (OPEC) have been piling pressure on its wealthier members, led by Saudi Arabia, to curb supply.

But Riyadh and its Gulf allies decided on Friday to stick to their strategy of defending market share, hoping that lower prices would ultimately drive higher cost producers, such as US shale oil firms, out of the market.

The Saudis have previously said they would be prepared to consider a cut only if OPEC members Iraq and Iran agreed to cooperate and non-OPEC members such as Russia joined in.

But Moscow repeated this week it saw no chance of joint action, and Iran and Iraq on Friday also showed no willingness to curb supply.

Iranian oil minister Bijan Zangeneh said before the meeting that Tehran would be prepared to discuss action only when his country reached full output levels, if and when Western sanctions on the country are lifted next year.

Iraqi oil minister Adel Abdel Mahdi said his country would further raise output next year after having steeply increased production in 2015.

Saudi oil minister Ali al-Naimi said he hoped growing global demand could absorb an expected jump in Iranian production next year.

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