OPEC maintains crude production as group defers output target

VIENNA, Austria (Bloomberg) -- OPEC will maintain production at current levels and refrained from setting an official output target, a continuation of the Saudi Arabian-led policy that’s driven prices to a six-year low.

The Organization of Petroleum Exporting Countries decided to retain production at 31.5 MMbopd, group President Emmanuel Ibe Kachikwu told reporters on Friday, after a meeting of OPEC ministers in Vienna. OPEC will wait until its next meeting in June to confirm its output target, said Secretary General Abdalla El-Badri.

“Effectively it’s ceilingless,” Iranian Oil Minister Bijan Namdar Zanganeh said on Friday, after returning from the meeting with his OPEC counterparts. “Everyone does whatever they want. I think there will be a decision about how to act on the market in the second quarter of 2016.”

Guided by its biggest producer Saudi Arabia, OPEC has maintained output to force higher-cost producers to scale back their operations. The group also needs to prepare for increased shipments from Iran when international sanctions are lifted. OPEC has pumped more than its previous collective target of 30 MMbopd the past 18 months, data compiled by Bloomberg show. 

“The volume maximizing strategy goes on for OPEC,” said Giovanni Staunovo, an analyst at UBS Group AG Zurich. “It’s at least better to give up a useless ceiling. The burden to adjust supply remains on non-OPEC producers.”

OPEC pumped 31.5 MMbopd in November, Zanganeh said.