Market share continues to be Saudi Arabia’s main concern—and not even $40 oil prices will make it give into peer pressure to cut production.
Major oil producers have been trying to convince Saudi Arabia, the Organization of the Petroleum Exporting Countries’ biggest producer, to take the lead and cut production to stem the price declines.
But output from the nation instead climbed to about 10.45 million barrels a day in July from 10.1 million in April, according to an estimate from Platts, even though West Texas Intermediate and Brent oil prices CLV5, -2.16% LCOV5, -1.90% are down roughly 15% year to date on the back of a global supply glut.
Venezuela has asked OPEC to hold an emergency meeting and to consider a coordination with non-OPEC Russia to discuss a strategy to stem the recent oil-price rout, The Wall Street Journal reported last week.
Other OPEC members, including Iran, which is set to boost production as sanctions on the country are eased in the wake of a nuclear agreement with the West, have also reportedly pressured the Saudis to lower their output.
Oil prices will move higher if Saudi Arabia makes a sacrifice and cuts its own production—and that would benefit every other producing nation, said Patrick Kerr, owner of private-investment firm The Kerr Organization.
Members have been increasingly worried about the low prices for oil and it shows. In a monthly bulletin released Monday, OPEC said low prices were a “cause for concern” and that there is “no quick fix” for them. OPEC also said it would “protect its own interest.”