PARIS, December 11. The oversupply of oil will continue until the end of 2016 due to the OPEC production. This is stated in the December report, the IEA.
The world oil market will remain oversaturated with the proposal, at least until the end of 2016, the report said.
“While oil is teetering near $40 per barrel and is approaching the lows for 7 years, price movements in early December indicates that regardless of the current prices of the OPEC countries intend to maximize your cost proposal of oil and knock out from the market of high-cost oil production of countries outside OPEC”, – the report says the IEA.
The IEA estimates that oil production by OPEC countries in November increased by 50 thousand barrels/day to 31,73 million barrels/day.
The IEA has maintained forecasts of world oil demand in 2015 and 2016.
Why falling oil
The reason for another decline in oil prices has been the lack of a coherent OPEC’s decision on quotas following the meeting on 4 December and the persistence of rhetoric, pointing to the desire of OPEC to maintain its market share.
According to the results of 168-th meeting in Vienna on 4 December, the Ministers of oil of the OPEC has not taken a clear decision on production quotas because of the position of countries that are not members of the organization.
Currently the volume of oil production by OPEC members is estimated to be 31-32 million barrels/day. The previous quota was 30 million barrels/day. As was stated by the oil Minister of Iraq Adel Abdel Mahdi, a decision on the quotas was not adopted because of the position of countries outside the cartel.
In his opinion, to stabilize oil prices, all countries should set limits on production. Due to the lack of such restrictions, world oil prices fell to their current levels, stated the Minister of oil of Iraq.
Prices for Brent crude and the dollar
Prices for Brent crude and the dollar. Infographics