No matter what OPEC says Friday about its production target, the outcome is sure to be more oil.
Iran, Iraq and Libya said this week they plan to add millions of barrels to the market this year. Saudi Arabia, the biggest member in the group, is already pumping the most in three decades. And executives from the world’s biggest oil companies pledged to keep expanding by cutting costs and focusing on the most promising drilling sites.
The contest for market share is proving more important than price as the Saudis seek to undercut higher-cost producers while costs keep dropping. The competition is intensifying because producers are eager to sell ever more oil even as world demand slows.
“High prices spurred the commercialization of an awful lot of oil that’s now ready to be sold in the market,” Ed Morse, Citigroup Inc.’s New York-based head of global commodities research, said by phone. “The decline in demand is making it very difficult to sell oil when you’ve got not just the shale revolution, but Iran and Iraq and other OPEC countries wanting to produce a lot more.”
Brent crude, the benchmark for more than half the world’s oil, fell 60 percent to a six-year low of $46.59 a barrel in January from $115.06 in June. It’s up 32 percent since then and traded at $61.65 a barrel at 10:06 a.m. London time Friday. The U.S. Energy Information Administration forecasts Brent will average $60.79 in 2015.
Angola needs a price of $80, Oil Minister Jose Botelho said Friday in Vienna. New projects will slow down amid the slump in prices, he said.