OPEC Ceiling Removal a Huge Mistake

OPEC Ceiling Removal a Huge MistakeOPEC Ceiling Removal a Huge Mistake

The removal of the crude production ceiling by the members of the Organization of Petroleum Exporting Countries was a “huge and historic mistake”, Oil Minister Bijan Namdar Zanganeh said in a statement.

“It comes as a surprise the quota was removed in the first place,” the minister told IRNA. “Compensating for this big mistake would be extremely difficult.”

The ministers decided in December 2011 to set an official production ceiling of 30 million barrels per day for the entire group without individual country quotas. But the group has exceeded the official target every month since May 2014.

OPEC has boosted production by almost 1.5 million bpd since November 2014. Data show the organization supplied 31.76 million bpd and 31.64 million bpd of oil in September and October, respectively.

Brent fell from more than $100 a barrel in July 2014 to less than half that amount six months later and is now trading at below $50 a barrel.

“There appears to be no willingness by OPEC members to reduce output and cut production ceiling (in the Dec. 4 summit),” Zanganeh said.

In a statement last week, the Iranian oil minister said he did not expect OPEC to change its output policy when it meets on December 4, adding that Tehran will not take permission from other producers to raise output.

Sanctions cut Iran’s sales of crude and condensate to 1.4 million barrels a day in 2014 from 2.6 million in 2011, according to the US Energy Information Administration said.

But Tehran plans to regain lost grounds from the likes of Iraq and Saudi Arabia—who are pumping more oil to defend market share—by raising output by 500,000 bpd within a week of lifting the sanctions.

Zanganeh also said the oil market is currently facing a global oversupply, but demand is gradually rising, which would help prices to pick up in the long run.