The June 5 meeting of the Organization of the Petroleum Exporting Countries will not result in the rise or fall of oil prices as the cartel is not expected to lower production, experts believe.
'There is a general consensus in the market that the cartel will maintain its current ceiling and as such do not expect any major price movement in the wake of the meeting,' Emma Richards, an oil and gas analyst at London-based BMI Research, told Anadolu Agency on Tuesday.
OPEC had agreed to maintain its 30 million barrels per day (mb/d) of production in the Nov. 27 meeting, despite low oil prices.
'We expect OPEC to maintain its 30 mb/d production ceiling at the meeting on June 5. In our view, there would be no logic to a cut at this point in time,' Richards said.
The cartel had decided not to interfere with oil prices at its November meeting, 'to allow for the market to clear the industry of the highest-cost production' she said and added that the effects of that policy can be seen through the decrease in the number of expensive and unconventional projects such as oil sands and shale gas developments and Arctic drilling.
'Any cut to production in June could reverse the gains of the last six months, posing a major risk to OPEC's longer-term export revenues,' Richards added.
'A bigger challenge to the group's unity will come from the prospective return of Iraq to the OPEC quota system and the ramp-up of Iranian exports in a post-sanctions scenario,' she evaluated.
Oil prices have been experiencing a slight increase of about $15 since February, resulting in a reduced demand for a production cut, Fatih Macit, an energy expert from the Caspian Strategy Institute said.
Lowering the level of oil production on Friday to increase oil prices, while the U.S. and Russia are raising supply, would only result in the fall of OPEC's share in the market, Macit added.
'In previous meetings, OPEC's strategy towards falling oil prices was to keep output levels the same and instead wait for the market to correct itself,' Macit reminded.
The OPEC meeting is likely to address the fall in supply in the coming period, affected by low oil prices, and the rise in demand caused by the growth in the European economy, he evaluated and added that accordingly, the market will balance itself in the future although not as much as to reach prices per barrel of at least three digit mark.
By Zeynep Beyza Karabay & Furkan Naci Top
Anadolu Agency
zeynep.karabay@aa.com.tr