With OPEC's Nov. 30 meeting in Vienna just days away, the oil minister of Iran, a member state once reluctant to help the cartel gouge gas prices, announced his readiness to join in and strengthen production cuts.
“It is highly probable that oil and energy ministers of the member countries of Organization of Petroleum Exporting Countries will reach an agreement in the Nov. 30 meeting,” Iranian Oil Minister Bijan Zangeneh said Saturday after meeting with OPEC’s secretary general in Tehran, the oil industry news site Shana reported. He added that “even Western countries expect higher prices in the market that the current levels,” and that the cartel would target a range of $55 to $60 per barrel, up from less than $50 today.
Zangeneh’s declaration contrasted with his stalemate last summer, when he blocked the cartel from reaching an agreement at a June 2 meeting in the Austrian capital by refusing to support a Saudi Arabian proposal to freeze output and consequently jack up the price of oil.
The 14-member industry group, whose member nations have suffered over the past two years from the plunging price of their economies’ top commodity, announced at the end of September its plans to cut production at its upcoming Nov. 30 meeting to between 32.5 million and 33 million barrels per day. OPEC’s current output is approximately 33.26 million barrels per day.
Since the summer of 2014, oil prices have more than halved, plummeting from more than $110 per barrel to about $47. The drop has been especially painful for OPEC member states like Iraq, where oil production accounts for more than 41 percent of gross domestic product (GDP) and Saudi Arabia, where it makes up nearly 39 percent of GDP.
But while the cartel may have finally reached consensus on its price gouging plans, the effect of an output cap may be limited.
In October, the World Energy Council released a report from its 2016 summit predicting demand for energy to peak before 2030.
“It is clear that we are undergoing a grand transition, which will create a fundamentally new world for the energy industry,” said Ged Davis, the council’s Executive Chair of Scenarios, according to the report. “Historically people have talked about peak oil but now disruptive trends are leading energy experts to consider the implications of peak demand.”
The election upset of Donald Trump on Nov. 8 also stands to potentially nullify the effects of an OPEC production cut. On his campaign site, the president-elect pledges to “unleash America’s $50 trillion in untapped shale, oil and natural gas reserves” and “eliminate all barriers to responsible energy production, creating at least half a million jobs a year, $30 billion in higher wages and cheaper energy.”