OPEC members’ average crude price fell below 80 USD for the first time in four years as Saudi Arabia and other members of the group supplying 40 percent of the world’s oil maintained output amid slowing demand growth.
The OPEC basket, the best measure of what the oil exporters earn per barrel, fell to 78.67 dollars. That’s the lowest since October 22, 2010, according to data compiled by Bloomberg.
U.S. oil production rose to the highest in at least 31 years amid slowing global demand, helping drive crude into a bear market last month. The largest producers in the Organization of Petroleum Exporting Countries reduced prices rather than cut output, with Saudi Arabia, Iraq and Iran offering the biggest discounts to buyers in Asia this month since at least 2009. The group will meet in Vienna on Nov. 27 to discuss whether to cut output to support prices.
“Saudi Arabia seems to have other aims than protecting the price,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “The Saudis’ attitude might only change if the other members agree to contribute to a cut, the likelihood of which is slim at best.”
Brent futures, the world’s most actively traded crude contract, fell as much as 1.4 percent to USD 81.63 a barrel in London. The December contract traded at USD 82.14 a barrel.
Saudi Aramco surprised traders last month when it trimmed November official selling prices for its Arab Light crude to a six-year low for buyers in Asia. The move was interpreted as a shift in the stance of OPEC’s biggest producer to prioritize defending market share over supporting prices. Iran and Iraq followed the Saudi cuts.
While Saudi selling prices to Asia for December increased, the cost of Arab Light for U.S. buyers was cut by 45 cents a barrel to the smallest premium in a year.
Members of OPEC are engaged in an internal “price war” as they seek to preserve their share of an oversupplied market, Iraqi Oil Minister Adel Abdul Mahdi told the parliament in Baghdad Oct. 30.
“As the price continues to slide, calls for action from some of the weaker producers may intensify,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e-mail. “Even a 1 million barrel cut in production would only help stabilize the price, not support a recovery.”
OPEC’s crude production rose to a 14-month high of 31 million barrels a day in October, led by Iraq, Saudi Arabia and Libya, according to a Bloomberg survey of oil companies, producers and analysts.