VIENNA — In one of its most critical sessions in years, the Organization of the Petroleum Exporting Countries (OPEC) meets Thursday to seek a compromise on cutting production to stem falling oil prices.
Energy ministers from the 12 nations that account for 40% of global oil supplies have seen prices drop to their their lowest levels in four years, as output runs ahead of demand. Prices have fallen 30% since they last met in June.
Finding a consensus among the members — Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela — won’t be easy because of broad disagreements on what production levels will be.
“All the numbers suggest that OPEC is producing well above what it’s going to need to produce next year just to keep the market balanced,” said John Kingston, of Platts, an energy-information service. “Unless this market is prepared to take a further plunge, somebody has got to make that excess oil disappear,” he said.
On Wednesday, the January contract for Brent crude oil, the major international gauge for oil contracts, slipped to $78.28 a barrel. The January contract for West Texas Intermediate (WTI), the U.S.-focused barometer was $73.95 a barrel, a a four-year low.
OPEC has a formal supply target of 30 million barrels a day. But for the past six months, it has produced an excess of 600,000 barrels a day, according to the International Energy Agency. In October, OPEC and non-OPEC nations produced 94.2 million barrels of crude oil and related products a day — 2.7 million barrels more than a year ago, according to the IEA.
One reason for the supply glut: Non-OPEC members such as China, Mexico, Russia and the United States are now major oil producers. For the U.S., OPEC imports are running at a 30-year low because of a shale oil-and-gas production boom known as fracking. Shale is extracted by horizontal drills that fracture and probe sedimentary rocks.