The oil industry has been struggling with both tumbling demand and in-fighting among producers about reducing output.
Earlier this month, OPEC members and its allies finally agreed a record deal to slash global output by about 10%. The deal was the largest cut in oil production ever to have been agreed.
However, analysts said the cuts were not big enough to make a difference.
Meanwhile, concern continues to mount that storage facilities in the US will run out of capacity, with stockpiles at Cushing, the main delivery point in the US for oil, rising almost 50% since the start of March, according to ANZ Bank.
“We hold some hope for a recovery later this year,” the bank said in its research note.
The drop was also driven by a technicality of the global oil market. Oil is traded on its future price and May futures contracts are due to expire on April 21. Traders will be keen to offload those holdings to avoid having to take delivery of the oil and incurring storage costs.
Brent oil, the benchmark used by Europe and the rest of the world, was slightly weaker, down 0.8% to $27.87 a barrel.
London’s FTSE 100 index is facing its worst day
since the financial crisis after it fell 8% in early trade, wiping billions off
the value of major companies.
The UK’s top share index drop follows global falls as a row between Russia
and Saudi Arabia saw oil prices plunge by more than a fifth.
Shares were already reeling from fears of the impact of the coronavirus as
cases globally continue to rise.
March 9 has already been dubbed “Black Monday” by analysts who
described the market reaction as “utter carnage”.
The FTSE 100 index fell more than 8% in the first few minutes of trade,
before recovering slightly.
Oil prices are down more than 20%
with Brent crude trading at $35.98 a barrel.
Oil companies saw the biggest falls,
with shares in Shell and BP both down by about 15%, while Premier Oil saw its
shares more than halve in value.
The hefty falls were also seen
elsewhere in Europe, with stock markets in France and Germany also opening more
than 7% lower. Norway – a major oil exporter – saw its main stock exchange fall
12% in early trade.
The price of oil had already fallen
sharply this year as the coronavirus disease began to spread internationally,
with demand for fuel expected to decline.
Last week, oil exporters’ group OPEC
– which includes Saudi Arabia – agreed to cut production in order to support
prices.
However, it also wanted non-OPEC oil
producers such as Russia to agree to cuts, and on March 6 Russia rejected the
plans.
In response, Saudi Arabia has cut
its official selling prices for oil and plans to increase production. The move
is seen as Saudi Arabia flexing its muscles in the oil market to make Russia
fall into line.
Asian investors also reacted to a
slump in Chinese export figures and the shrinking of the Japanese economy.
In China, the benchmark Shanghai
Composite share index fell 3%, while in Hong Kong, the Hang Seng index sank
4.2%.
On March 7, China released import
and export figures for the first two months of the year. Exports fell by 17.2%
while imports dropped by 4%. This gave the Chinese economy a trade deficit of
$7.1 billion as it struggles with the economic impact of the coronavirus
outbreak.
Meanwhile, Japan’s economy shrank at
a faster rate than initially estimated in the final three months of 2019,
according to the latest official figures.
President Donald Trump has urged Saudi Arabia to increase its oil production to combat the rising cost of fuel.
He tweeted that he had asked King Salman of Saudi Arabia to raise oil output by up to two million barrels a day.
President Trump said the move was needed due to “turmoil and dysfunction in Iran and Venezuela”.
Oil prices rose last week, partly due to US plans to re-impose sanctions on Iran, a major oil producer.
The OPEC group agreed to increase output, as did Russia, but this failed to reassure markets.
The Saudi Press Agency confirmed that President Trump and King Salman had spoken by phone, giving few details. According to the news agency, they had discussed the need to “preserve the stability of the oil market”.
However, the statement did not confirm that Saudi Arabia had agreed to the two million barrels a day figure.
Saudi Arabia is the world’s biggest exporter of oil and produced about 10 million barrels a day in May. The country is reported to have between 1.5 million and two million barrels a day of spare capacity – but experts told The Wall Street Journal it might not be keen to meet the president’s request.
A Saudi official told the WSJ: “Saudi Arabia does not really like going beyond 11 million barrels a day and has no intention of expanding its current production capacity. It is expensive.”
Donald Trump has repeatedly criticized OPEC even though US ally Saudi Arabia is a core member.
On April 20, President Trump tweeted that oil prices were “artificially very high”, saying this was “no good” and “will not be accepted!”
Iran, another OPEC member, has accused Donald Trump of trying to politicize the group and has blamed Riyadh for doing his bidding.
On June 30, Iranian Supreme Leader Ayatollah Ali Khamenei said the US was trying to drive a wedge between Iranians and their government using “economic pressure”.
He cautioned on his website: “Six US presidents before him tried this and had to give up.”
The value of Iranian currency, the rial, has tumbled since the US backed out of the Iran nuclear deal in May.
Earlier this week, thousands of traders at Tehran’s Grand Bazaar marched in protest against rising prices and the plummeting value of the rial. It was the biggest protest Tehran has seen since 2012.
Oil prices have been rising since the OPEC nations, as well as other producers including Russia, decided to restrict output last year.
Last November they agreed to extend those cuts until the end of 2018.
President Donald Trump has said that unless European allies fix what he has called “terrible flaws” in the accord by May 12, he will restore US economic sanctions on Iran.
The other nations that signed the deal – France, Germany, the UK, Russia and China – all want to keep in place the agreement, which has halted Iran’s nuclear program in return for most international sanctions being lifted.
Saudi Arabia said it was “committed” to stabilizing the global oil market, and that its output was still in line with its OPEC target.
OPEC said in its report: “Despite the supply adjustment, stocks have continued to rise, not just in the US, but also in Europe.
“Nevertheless, prices have undoubtedly been provided a floor by the production accords.”
Photo Getty Images
In February, Saudi Arabia’s production increased to 10.011 million barrels per day, compared with 9.748 million barrels per day in January.
Saudi Arabia’s energy ministry said the country “is committed and determined to stabilize the global oil market by working closely with all other participating OPEC and non-OPEC producers”.
Oil prices fell after the release of the OPEC report to trade close to $50 a barrel, their lowest since November.
Crude prices are still higher than $40 per barrel a year ago and a 12-year low of about $28 in January 2016.
Brent crude oil price settled about 0.5% down at $51.09 per barrel, while US crude was at $47.90.
Oil prices have jumped after oil producing countries that are not OPEC members agreed to cut output.
Brent crude oil price surged to $57.89 a barrel – the highest since July 2015 – before falling back to $56.55, although that was still a gain of 4.1% on the day.
On December 10, non-OPEC countries agreed to cut their output by 558,000 barrels a day in a deal designed to reduce oversupply and boost prices.
OPEC announced last month that it would be cutting its own production.
It committed to halting the supply of 1.2 million barrels a day, starting from January.
The new deal is the first global pact in 15 years.
Saudi Arabia has also signaled it could cut its output more than first suggested – something that could further lift prices.
But some expressed doubts about the deal’s long-term chances of success.
Those taking part in December 10 deal included Russia – which will provide the lion’s share of the cut – as well as Mexico and Bahrain among others.
The move comes after more than two years of depressed oil prices, which have more than halved since 2014 due to a supply glut on the market.
Oil price has surged after reports that OPEC members have agreed some details of a production cut.
Oil prices rose nearly 7% as energy ministers attended November 30 OPEC meeting in Vienna.
Ahead of the meeting Saudi energy minister Khalid Al-Falih had said “there are good chances” a formal deal could be struck.
Two months ago, oil ministers had said full details of the agreement would be finalized at the meeting.
OPEC pledged to limit production by about 700,000 barrels a day, but said Iran would be allowed to increase production.
Oil prices rose then, but the absence of detail prompted some traders to have second thoughts about whether the cartel would actually take firm action.
Saudi Arabia has agreed to cut output by about 500,000 barrels per day at the meeting, Reuters reported.
That would take its output to 10.06 million barrels per day.
Reuters also reported that OPEC has agreed to suspend Indonesia’s membership to allow Iran to set new production levels at 3.797 million barrels per day.
Ahead of November 30meeting, Khalid Al-Falih said “there are good chances” that a detailed deal can be brokered, and that “the spirit is good”.
The Saudi energy minister said his country would have to “take a big cut and a big hit” to current production – and its 2017 forecast – if OPEC production were limited to 32.5 million barrels per day.
“So we will not do it unless we make sure that there is consensus,” Khalid Al-Falih added.
A production freeze for Iran at pre-sanctions levels would be “very considerate of other OPEC members when they’re having to cut,” he said.
“Iran has recovered to its pre-sanctions levels,” Khalid Al-Falih said.
Saudi Arabia has also been discussing a production cut with Russia, he added.
Brent crude rose 6.9% to $50.58 per barrel, while US crude also rose 6.7% to $48.25.
Traders said markets were jittery and prices could swing sharply in either direction depending on developments in Vienna.
A decision to cut has been hindered by a rivalry between Saudi Arabia, OPEC’s top producer, and Iran.
The Saudis have been hesitant to shoulder the lion’s share of a cut, while Iran has resisted reducing its own production, arguing it has yet to recover its output levels after years of sanctions.
Brent crude oil rose almost 6% to nearly $49 a barrel after Opec has agreed a preliminary deal to cut production for the first time in eight years.
The major oil exporting nations struck the deal at talks in Algeria on September 28 to ease fears of oversupply.
“Opec made an exceptional decision today,” Iran’s Oil Minister Bijan Zanganeh said.
While oil saw only small gains in early Asian trade, energy firms across the region soared.
Oil ministers said full details of the agreement would be finalized at a formal Opec meeting in November.
Output will fall by about 700,000 barrels a day, although the cuts will not be distributed evenly across the cartel, with Iran being allowed to increase production.
Disagreements between Iran and its regional rival Saudi Arabia had thwarted earlier attempts to reach a deal.
Many of Opec’s smaller members pushed for the cut after seeing oil prices plunge from $110 a barrel over the past two years due to oversupply and slowing demand.
Nigerian Oil Minister Emmanuel Ibe Kachikwu said it was a “very positive deal”, while Algerian Energy Minister Noureddine Bouarfaa said: “The decision was unanimous, and without reservations.”
The outline deal will limit output from Opec countries to between 32.5 million and 33 million barrels a day, said Mohammed Bin Saleh Al-Sada, Qatar’s energy minister and current president of Opec.
Current output is estimated at 33.2 million barrels per day, although Iraq questioned on Wednesday how Opec measures the oil production of its members.
Some oil traders remain skeptical about the deal, saying they want to see the full terms, including the cuts agreed by individual member states, before passing judgement.
Oil prices have dropped sharply after a meeting of oil producers in Qatar failed to agree a cap on output.
Brent crude fell 7% at one point, but then recovered slightly to stand down $1.87, or 4.3%, at $41.23 a barrel.
The meeting was attended by most members of oil producers’ group OPEC, including Saudi Arabia, but not Iran.
Saudi Arabia, the world’s biggest exporter, had been prepared to freeze output if all OPEC members had agreed.
However, Iran is continuing to increase output following the lifting of sanctions against it.
Photo Reuters
“As we’re not going to sign anything, and as we’re not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative,” the Iranian government said.
After hours of talks in Qatar, energy minister Mohammed bin Saleh al-Sada said that the oil producers needed “more time”.
Mohammed bin Saleh al-Sada told reporters after the meeting: “We of course respect [Iran’s] position… The freeze could be more effective definitely if major producers, be it from OPEC members like Iran and others, as well as non-OPEC members, are included in the freeze.”
As well as the fall in Brent, the price of US crude oil fell nearly 7% before recovering some ground to stand $1.88 lower at $38.48 a barrel.
The meeting in Qatar was not formally an OPEC event, though most of the group’s members were represented.
OPEC has been slow to respond to the sharp fall in oil prices, which are still less than half the peak of $115 a barrel seen in June 2014.
Oil prices had risen in recent weeks, largely due to speculation that some major exporters would limit supply.
Oil prices have plunged after Saudi Arabia said it would freeze production only if other major producers did the same.
Saudi Deputy Crown Prince Mohammed bin Salman’s remarks are seen as a challenge to Iran.
It has vowed to increase oil production following the lifting of Western sanctions.
In the Bloomberg interview, Prince Mohammed bin Salman also spoke about his plan for a giant public investment fund.
Worth more than $2 trillion, it would be designed to reduce Saudi Arabia’s reliance on income from oil.
Part of the plan would be a sale of shares in the state-owned oil company Aramco, which could start as soon as next year, according to the interview.
Iran will not take part in a conference in Doha on April 17, where the freezing of oil output is due to be discussed.
“If all countries agree to freeze production, we will be among them,” Prince Mohammed bin Salman told Bloomberg.
When asked whether Iran needed to be among those countries he said “without doubt”.
Oil prices, which had edged into positive territory, fell after Prince Mohammed’s comments.
Brent crude fell $1.63 cents, or 4%, to $38.70 a barrel. Prices rose 6% in the first three months of this year – the first quarterly increase since a 15% rally between April and June 2015.
A monthly survey by Reuters this week showed that oil output from the 13 OPEC members rose in March on higher production from Iran and near-record exports from southern Iraq.
Iraq reported OPEC’s biggest supply growth last year, producing more than 4 million barrels per day – making it the cartel’s second-largest producer after Saudi Arabia.
In February, Saudi Arabia and Russia said they would freeze oil output at January levels if other producers followed suit.
Oil prices have fallen from their recent peak of $116 in June 2014 because of oversupply and sluggish demand.
Oil prices soared as much as 12% on February 12 after new suggestions that OPEC nations were set to cut oil production.
According to the Wall Street Journal, the United Arab Emirates’ energy minister said that OPEC members were ready to reduce output.
Meanwhile, Venezuela’s oil minister said oil-producing nations were on a “very good path” to clinch a deal.
However, traders said sharp falls on February 11 may have triggered some bargain-hunting.
Eulogio Del Pino, the Venezuelan minister, who recently visited Russia and Saudi Arabia as part of a global tour to drum up support among both OPEC and non-OPEC producers, said “we’re on a very, very, very good path” to reducing production.
Brent crude closed up $3.30 at $33.36 a barrel in New York after falling below $30 on February 11.
After sinking to a 12-year low of $26.05 on February 11, US crude settled up 12%, or $3.23, to $29.44 a barrel – its biggest one-day rise since 2009.
Many traders were skeptical about the Journal‘s report, pointing out that Venezuela and Russia had tried in vain earlier this week to stir Saudi Arabia and other major producers into agreeing to output cuts.
However, some believe that prices would rebound sooner or later if production tightened or demand rose.
Commerzbank analysts said: “We expect declining US oil production, in particular, to drive the oil price back up to $50 per barrel by the end of the year.”
Friday’s price rises were also aided by figures from oil services company Baker Hughes, which said that US energy companies cut the number of oil rigs for the eighth consecutive week to the lowest levels since January 2010.
Drillers removed 28 oil rigs, bringing the total rig count down to 439, Baker Hughes said.
The jump in oil prices helped to boost sentiment on stock markets.
Wall Street was trading higher on February 12, with the S&P 500 rising 1.8% and the Dow Jones Industrial Average up close to 2% in late trading.
Oil prices fell again on January 25, eroding last week’s gains, as OPEC called for co-operation from oil-producing nations outside the cartel.
Brent crude fell 2.6% to $31.34 a barrel following a 10% rise on January 22, while US oil shed 95 cents to $31.24.
The slide came as the head of OPEC called for all oil-producing nations to work together.
Abdalla Salem el-Badri said both OPEC and non-OPEC oil producers needed to tackle oversupply to help prices rise.
“It is vital the market addresses the issue of the stock overhang. As you can see from previous cycles, once this overhang starts falling then prices start to rise,” he told a conference in London.
Photo AP
Despite the ongoing refusal of Saudi Arabia, the dominant OPEC member, to cut production, Abdalla Salem el-Badrinevertheless blamed countries outside the cartel for the huge global oil glut.
“Yes, OPEC provided some of the additional supply last year, but the majority of this has come from non-OPEC countries,” he said.
The organization accounts for almost 42% of the world’s oil production.
The OPEC secretary-general said all major producers should agree on methods to reduce stockpiles and thus help prices recover.
“The current environment is putting this future at risk. At current price levels, it is clear that not all of the necessary future investment is viable,” Abdullah al-Badri said.
Oil prices briefly fell to less than $28 a barrel earlier this month.
HSBC has lowered its forecast for the average price of Brent crude in 2016 from $60 to $45 a barrel, while UniCredit lowered it from $52.50 to $37 a barrel.
The prospect of OPEC members cutting production remains unlikely. Indonesia’s OPEC representative said that only one member of the cartel supported calling an emergency meeting to discuss ways of boosting oil prices.
The chairman of Saudi Aramco, the state-owned oil giant, said on January 25 that prices would ultimately rise to a moderate level as global demand increased.
The Iraqi government said on the same day that oil output reached a record high in December, producing as much as 4.13 million barrels a day.
Iran, which has the world’s fourth-biggest oil reserves, is also preparing to resume exports now that sanctions have been lifted.
A fall in the number of oil rigs in the US, one of OPEC’s biggest production rivals, could reduce output, with Goldman Sachs predicting a decline of 95,000 barrels per day this year.
Oil prices will recover to $70 a barrel by 2020, oil producers’ group OPEC has said.
Prices have fallen from more than $110 a barrel in the summer of 2014 to less than $37 a barrel now due to oversupply and slowing demand.
However, OPEC said oil prices would begin to rise next year and, longer term, would rise due to higher exploration costs.
It expects the market share of OPEC producers to shrink by 2020 as rivals prove more resilient than expected.
OPEC currently accounts for about 30% of the world’s oil production, down from 50% in the 1970s.
Part of the reason for this decline is the emergence of vast quantities of shale oil produced in the US. This has also been factor in pushing down the price of oil to 11-year lows.
Photo Getty Images
In its World Oil Outlook report, OPEC said it expected supply growth from US shale to slow dramatically in 2016, as producers struggled to cope with such a low prices.
OPEC’s strategy this year has been to allow prices to fall by maintaining production in the hope that, eventually, US shale producers will be forced out of business.
Another factor in low prices, OPEC said, was weaker economic growth, particularly in developing economies. It highlighted China, where the “economy seems to be maturing and growth is decelerating faster than previously expected”.
The group’s report also highlighted the “huge reductions” in spending on exploration and production by the industry as a whole due to low oil prices.
These cutbacks will ultimately see supply fall, it said, putting upward pressure on prices.
According to OPEC, another longer-term factor pushing prices up was higher exploration costs, as companies are forced to look harder for oil as traditional supply sources dwindle. Deep water drilling, for example, is considerably more expensive than drilling onshore.
Finally, OPEC said population and economic growth would see demand for energy rise by almost a half by 2040, increasing demand for oil.
OPEC was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
These countries have since been joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975) and Angola (2007).
Oil prices rose by almost 6% after Saudi Arabia and its allies launched air strikes on Houthi rebel targets in Yemen.
Saudi Arabia is the world’s biggest crude exporter.
The move has raised concerns that the conflict could spread in the oil-rich Middle East and possibly disrupt supplies from the region.
West Texas Intermediate crude futures, the US benchmark, rallied to about $51 a barrel before falling back.
Brent crude climbed to $59.71 a barrel, but has since dipped to $56.50.
Pressure on the oil price eased slightly as it became clear there was no immediate threat to Middle East oil shipments. However, fears remain that Iran could be drawn into the conflict.
Yemen is located along an important international shipping route for global energy producers. But the country is sliding towards civil war.
Houthi rebels receiving support from Iran have marched on the southern Yemeni port city of Aden, where Yemen’s President Abdrabbuh Mansour Hadi took refuge after he was forced him to flee the capital, Sanaa.
Saudi Arabia, supported by regional allies the United Arab Emirates, Bahrain, Qatar and Kuwait, launched airstrikes on Thursday aimed at halting the rebel advance.
Iran and Saudi Arabia are both members of the Organization of Petroleum Exporting Countries (OPEC), the group that produces about 40% of the world’s oil. Oil exports to Europe pass through the narrow Red Sea strait between the port of Aden and Djibouti.
However, the current glut in global oil stocks, built up in part thanks to US shale production and plentiful output from Russia and other producers, means there is unlikely to be an acute crisis in supply.
Brent crude oil price has fallen to $51.12 per barrel, its lowest level since March 2009.
It follows yesterday’s 6% plunge in prices.
The fall appeared to have been prompted by Saudi Arabia cutting prices to Europe.
At the same time, the kingdom, OPEC’s largest oil-producing nation, raised them for Asian customers.
Some analysts said the price cuts reflected Saudi Arabia’s deepening desire to defend its market share in Europe.
US oil fell further on January 6 to $48.01, having fallen below the symbolic threshold of $50 a barrel for the first time since April 2009 on January 5.
The prices of both Brent crude and US oil, known as West Texas Intermediate crude, have now fallen by more than 50% since mid-2014.
Investors are worried that a combination of global oversupply and weak oil demand could cause prices to tumble further.
However, the increase in production has come just as demand for oil in economies across the world from Europe to China – the world’s second-largest consumer of oil – has slowed.
Recent data also showed that Russia’s 2014 oil output hit a post-Soviet era high and exports from Iraq, OPEC’s second-largest producer, reached their highest since 1980.
Oil prices have fallen further after the International Energy Agency (IEA) forecast weaker demand in 2015.
The IEA, a consultancy to 29 countries, said supply and demand would take “some time” to respond to sharp falls in oil prices.
It said it was too early to expect low oil prices to start constricting a US supply boom.
On December, Brent crude fell to below $63 a barrel, its lowest price since July 2009.
The price of Brent fell to $62.50 a barrel at one point before recovering slightly to $62.67. US crude was trading below $59 a barrel.
The IEA cut its forecast for global oil demand growth next year by 230,000 barrels per day to 900,000 barrels per day on the expectation of lower fuel consumption in Russia and other oil-exporting countries.
Photo Getty Images
Oil prices have been in steep decline since June due to slow demand growth and a US shale oil boom which has increased supply.
Prices “continued to plunge in November and into early December”, the IEA said, adding that, “it may well take some time for supply and demand to respond to the price rout”.
The root cause of the fall in prices was “a surge in non‐OPEC supply to its highest growth ever and contraction in demand growth to five‐year lows”.
It predicted that non-OPEC supply gains would add to a global glut of oil.
The US boom should push non-OPEC production to a record 1.9 million barrels per day this year, IEA said, but this figure should fall to 1.3 million barrels per day in 2015.
In Russia, the IEA said lower global oil prices combined with the effect of sanctions and a “collapsing currency” were likely to have an adverse effect on production.
Oil prices plunged after the OPEC oil producers’ cartel decided not to cut output at its meeting in Vienna.
OPEC’s secretary general Abdallah Salem el-Badri said they would not try to shore up prices by reducing production.
“There’s a price decline. That does not mean that we should really rush and do something,” he said.
Following the announcement Brent crude fell below $72 a barrel, hitting lows previously seen in August 2010.
The 12 OPEC members decided to maintain production at 30 million barrels per day as first agreed in December 2011.
“We don’t want to panic. I mean it,” said Abdallah Salem el-Badri.
“We want to see the market, how the market behaves, because the decline of the price does not reflect a fundamental change.”
Crude oil prices have fallen 30% since June on sluggish global demand and rising production from the US.
The fall in the oil price has been causing concern for several members of the oil cartel, as most require a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel.
“Saudi Arabia and the Gulf states can resist for a while,” said Simon Wardell, energy expert at Global Insight.
“They have significant financial assets that mean they can sustain a lower oil price. They can secure their budgets without a higher oil price.”
Saudi Arabia is the largest producer within the OPEC oil producing cartel.
Analysts suggest the strategy of maintaining output may be aimed at retaining dominance of the market in the face of increasing shale oil production in the US.
The shale boom has been one of the drivers behind the decline in the oil price.
As the oil price dips, shale becomes less economical to produce.
If oil prices are allowed to remain low for some time that could cap shale production over the longer term.
OPEC accounts for a third of the world’s oil sales.
Brent crude oil price has fallen at a four-year low, from $3.60 or 4.4% to $77.52.
The benchmark US crude oil price is also at a four-year low, after losing $2.57 to close at $74.28.
The price has fallen sharply since the summer and is 30% below its June price.
The drop comes as traders believe members of the OPEC oil exporting countries, which control about 40% of world oil exports, will not cut production.
Brent crude oil price has fallen below $80 a barrel
OPEC’s 12 member countries will meet later this month to discuss the global oil market.
Lower oil prices typically prompt OPEC nations, which include the biggest oil exporting nation in the world, Saudi Arabia, to rein back output in order to limit supply and boost prices and income.
Most need higher oil prices to fund rising government spending.
Recent comments by oil ministers from Saudi Arabia and Kuwait suggest the group is unlikely to agree to a cut.
The US energy department said this week that it expected low fuel prices to last into next year.
Oil prices are close to a nine-month high due Iraq crisis.
Brent crude fell 27 cents to $114.79 a barrel, after reaching $115.71 on Thursday, the highest since September 2013.
Oilfields south of Baghdad, which export at least 2.5 million barrels per day of oil, are still unaffected.
Oil prices are close to a nine-month high due Iraq crisis
But the fighting in the north poses a risk to supplies, while foreign oil companies are beginning to pull out staff.
Global spare capacity in oil production is at about 2%, he said, meaning that a spike in demand of more than 2% will outstrip production.
Islamist-led militants and pro-government forces are engaged in fierce battles for the Baiji oil refinery and Tal Afar airport in northern Iraq.
Baiji, Iraq’s biggest refinery, is surrounded by the rebels, who say they have seized most of Tal Afar airport.
The fighting comes a day after the US said it would send some 300 military advisers to help the fight against the insurgents.
Following Libya’s war and the toppling of Muammar Gaddafi, production recovered, but then eventually petered out, as a weak government and continued skirmishes disrupted production.
Oil prices have reached a nine-month high amid concerns that developments in Iraq may affect global supplies.
Brent crude futures rose 3% to $113.27 per barrel, while US crude gained more than 2% to $106.71, the highest reading for both since September.
Insurgents have taken over two Iraqi cities, prompting the US to say it was considering “all options” to help Iraq.
Oil prices have reached a nine-month high amid concerns that developments in Iraq may affect global supplies
Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) group.
The developments have also hurt global stock markets. Shares in the US fell on Thursday and major stock indexes in Asia were also down in early trade on Friday.
Sunni Islamist insurgents have taken control of the Iraqi cities of Mosul and Tikrit.
Led by the Islamic State in Iraq and the Levant (ISIS), the insurgents are believed to be planning to push further south to the capital, Baghdad, and regions dominated by Iraq’s Shia Muslim majority.
Middle East is one of the biggest oil producing areas in the world and there are fears that if this conflict escalates further, it may hurt global oil supplies.
On Thursday, President Barack Obama said his government was looking at “all options”, including military action, to help Iraq fight Islamist militants.
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