OPEC Fails To Reach Consensus On Oil Production

Mohammed Barkindo has been named OPEC's new secretary general at a meeting in Vienna where the oil cartel failed to come to an agreement on limiting supply. Photo credit: Suzanne Plunkett / Bloomberg News

VIENNA, AUSTRIA – OPEC’s meeting in Vienna has ended with officials from the 13-nation cartel, which produces one third of the world’s oil, unable to agree on limiting supply.

According to a CBC News article, OPEC officials at the meeting read a statement emphasising the need for members to work for a stable crude oil market. The group stopped well short of any agreement to turn off the taps and push prices higher.

For decades, the oil cartel has been able to basically world oil prices due to its members controlling a large portion of supply.

In recent years the group’s grip on prices seems to have come to an end, as prices above $100 US/barrel spurred research and development into finding alternate sources of oil. Those sources such as Russian offshore oil, Canadian oilsands oil and U.S. shale oil have flooded the market, pushing down prices and leaving OPEC nations fighting among themselves for market share.

Thursday’s meeting was the second one this year in which the cartel pushed for an agreement, but failed to achieve one. Despite this, the United States released information this morning, saying that their stockpiles of crude have dropped by 1.4 million barrels of oil, which led to a rally in the price of crude oil in late morning trading, according to a report by Reuters.

With files from CBC News: http://www.cbc.ca/news/business/oil-opec-1.3612407, Reuters: http://www.bnn.ca/News/2016/6/2/Oil-turns-positive-as-US-crude-drawdown-offsets-OPEC-outcome.aspx