OPEC is expected to keep its current 30 million barrel per day production target in place at its meeting on Friday, despite continued oil price volatility and a pending sanction-ending deal with Iran.
An unnamed OPEC delegate told Reuters the group will most likely keep its current production target in place at the behest of members from the Arab Gulf region.
“There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged. Nobody wants to rock the boat. The meeting is expected to be smooth sailing,” a senior Gulf OPEC delegate said.
The senior Gulf delegate added that OPEC members expect crude demand to grow in the second half in the year.
Iraqi oil minister Adel Abdel Mahdi told Reuters there was “optimism and general acceptance with the current situation” among the group’s members.
Officials from Saudi Arabia, OPEC’s largest producer, have been vocal supporters of the current target despite push back from smaller OPEC producers.
In November, Venezuela joined a chorus of smaller OPEC producers critical of the production target, calling Saudi Arabia’s reluctance to cut production the opening shot of a “price war.”
Earlier this year, Saudi Arabian oil minister Ali Al-Naimi said that OPEC can not be solely responsible for safeguarding global oil prices.
BP CEO Bob Dudley said on Wednesday that, while the worst of the oil price rout may be over, price softness could persist moving forward.
“We are at a balance with th supply and demand right now. I think we can see some softness in price continuing and as a result as an industry we must readjust cost structures, tax structures around the world,” Dudley told Reuters.
A pending nuclear agreement between western powers and Iran could further complicate the crude supply picture.
Western sanctions have restricted Iran’s crude exports to 1 million barrels a day from a high of 2.5 million barrels per day since 2012.
The oil rich country currently pumps about 3.5 million barrels of crude per day, according to OPEC.
While Iran is anxious to ramp its crude exports as soon as possible it will take several months or even a year before the country’s crude makes a dent in global supplies.
The U.S. State Department has said sanctions against Iran related to terrorism, human rights abuses and ballistic missiles would remain in place under the deal.
Iranian and western officials must still finalize the deal and have not yet agreed on a timeline for lifting the sanctions.
“Due to heightened uncertainty with an (Iran nuclear) deal, we think OPEC is likely to take a wait-and-see approach to the prospect of additional oil,” Barclays analysts told Reuters.
A leaked draft of OPEC’s long term strategy report seen by Reuters found that non-OPEC production will keep growing until 2017 as unconventional drillers continue to tough out low prices.
The researchers also found that demand for OPEC oil should start to grow again after 2019 and will hit 40 million bpd in 2040.
The report is assembled every five years by OPEC’s Vienna-based research team and does not necessarily reflect the final position OPEC will take at its next meeting.
OPEC will meet on June 5 in Vienna, Austria.