VIENNA, Nov 27 (Reuters) – Gulf oil producers led by Saudi Arabia looked set on Thursday to block any cut in OPEC output, ignoring calls from poorer members of the exporters’ group for action to halt a slide in crude prices.
With markets sensing OPEC will keep its production unchanged despite huge global oversupply, the price of benchmark Brent crude oil fell $2 to a 50-month low under $76 a barrel.
“OPEC is unlikely to cut today,” a Gulf delegate told Reuters shortly before ministers began one of their most closely-watched meetings in years in Vienna on Thursday. Another delegate agreed, although a third said the outcome was too difficult to predict. OPEC ministers started a closed session shortly before 1000 GMT.
Wealthy Gulf states seem ready to ride out the weak prices that have hurt the likes of Venezuela and Iran – OPEC members which need output cuts to stabilise the market and ease pressure on their state budgets, but cannot afford to make any themselves.
On Wednesday, Saudi Oil Minister Ali al-Naimi and his United Arab Emirates counterpart, Suhail bin Mohammed al-Mazroui, said they expected the oil market to stabilise itself. A Gulf OPEC delegate told Reuters the Gulf producers had reached a consensus not to cut output.
Oil prices having sunk 30 percent since June due to a boom in U.S. production from shale deposits, coupled with slack demand caused by slower economic growth in China and Europe.
The Organization of the Petroleum Exporting Countries accounts for a third of global oil output. If it were to cut exports without similar action by its competitors, it would lose further market share, including to North American shale oil producers.
On the other hand, a decision to stick to existing output levels would effectively mean the start of a battle for market share, Iranian Oil Minister Bijan Zangeneh said.
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