OPEC Decision Not Good for All Members

OPEC Decision Not Good for All Members
OPEC Decision Not Good for All Members

OPEC's decision to retain its production ceiling is not beneficial to all OPEC member states, but Iran has refrained from objecting in order to maintain group unity, said the oil minister.

"I don't think this decision is beneficial to all OPEC member countries as some member countries were against the decision," Shana quoted oil minister Bijan Namdar Zanganeh as saying, citing an interview he gave to CNN. "But because of the unity and solidarity of OPEC, we decided not to challenge the decision."

The 12-member oil organization on Thursday said it would stick to its output target of 30 million barrels a day, triggering a sharp decline in oil prices.  Brent hit a new four-year low, below $70 per barrel on Friday, and US crude futures tumbled to nearly $6 to $67.75 - the lowest since May 2010.

OPEC's contentious decision to keep to its production target, leaving the market with a supply glut, could trigger a wave of debt defaults by US shale oil producers.

On whether the OPEC decision was aimed at shale boom in the US, Zanganeh said some OPEC members consider the shale boom in United States as "a challenge for OPEC's future, given its potential to replace conventional oil and take OPEC's share in the market."

  UAE Stance

Meanwhile, the energy minister of the United Arab Emirates voiced support for the OPEC decision. "We don't support being a swing producer whenever the price falls; the decision benefits the market, the customers and the world economyý," Suhail bin Mohammed al-Mazroui said on his twitter feed on Saturday.

"OPEC countries will compensate any decline in the world supply as we are the most cost-effective producers compared to unconventional," Mazroui said, echoing Saudi's position. "The market will dictate the right sustainable and stable price ... We need to allow enough time for market stability."

A boom in shale oil production and weaker growth in China and Europe have sent prices down by over a third since June.