On Thursday, OPEC broke off its meeting without reaching any new agreements on oil production, continuing a hands-off policy that members say is gradually bringing supply and demand back into balance and boosting prices.
The cartel that controls over a third of the world’s oil rejected the idea of reintroducing a collective output limit, a move that some oil producers had floated as a way to inject some discipline into the group. The Organization of the Petroleum Exporting Countries has been pumping all out for 18 months and weighing down prices with a resulting glut.
“But with oil prices having risen about 80% over the past few months from 13-year lows hit in the winter, there was little pressure on OPEC to take dramatic new action,” said OPEC ministers after the meeting.
“The worst is over for oil,” said Mohammed al-Sada, the energy minister for Qatar, at a news conference following the Vienna meeting. “There was consensus that market fundamentals are working and there wasn’t pressure on OPEC to think about influencing supply and demand.”
With Thursday’s meeting, OPEC continued an extraordinary 18-month track record of doing nothing in the face of prices that remain down more than 50% from their peak in 2014, when prices began a long slide.
Oil prices fell after the announcement, with Brent crude down 1.6% in European afternoon trading.
The cartel once used its collective might to support prices with production cuts that kept supply and demand relatively in balance, and prices stable. An American oil boom changed that equation, producing a glut of crude that was too much for OPEC to handle and has ushered in a new era of cheap energy for consumers across the world.
Indeed, rising demand in the U.S., India and other major consumers was a major reason for OPEC’s optimism, ministers said. They also pointed to falling production in the U.S., where output from shale formations has fallen under the weight of collapsed prices.
A spate of production disruptions from Canada to Nigeria have taken barrels off the oversupplied market, boosting prices further.
However, Mr. Sada said the price rout in the past two years has led to an “unprecedented lack of investment” in the industry.
“A fairer price is required to continue investment in oil projects,” he said.
Geopolitical tensions also contributed to scotch the deal, with Iran taking a firm stand against any move that would limit its own production as it aims for an economic comeback following the end of Western sanctions in January.
Saudi Arabia, OPEC’s largest producer and Iran’s rival, had tried to engineer output limits in recent months and signaled a willingness to consider a new collective production ceiling, but only if all members including Iran joined in. OPEC had a production ceiling of 30 million barrels a day until December 2014—a limit that was often ignored.
Iranian Oil Minister Bijan Zanganeh ruled out production ceilings on Wednesday night, effectively killing the idea before the meeting. OPEC decisions must be unanimous.
The producer group named Mohammed Barkindo of Nigeria as its new secretary-general, a position that holds sway over its Vienna bureaucracy and mediates disputes among its often-divided members.
Mr. Barkindo said the group may come up with an output ceiling in the future but is comfortable without one for now.
The cartel agreed to allow Gabon to re-enter OPEC two decades after the West African nation left OPEC. With 240,000 barrels a day of production, Gabon will be OPEC’s smallest producer and 14th member.