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Oil price at four-year low as Opec meets Opec leaves oil output unchanged
(24 minutes later)
Crude oil prices have fallen to a four-year low as Opec nations meet in Vienna to discuss production levels. Members of Opec meeting in Vienna have opted not to cut output, despite crude oil prices slipping to a four-year low.
A cut in production appears unlikely after Saudi Arabia, Kuwait, Qatar and the United Arab Emirates said they had reached a consensus on oil output. Following a five hour meeting the Saudi petroleum minister, Ali al-Naimi, told reporters that Opec members would not reduce their oil output.
It is thought those big producers want to maintain production at the current level. Saudi Arabia indicated before the meeting that it wanted to maintain production at the current level.
Brent crude fell by about $2 on Thursday to $75.75 a barrel, the lowest level since September 2010. Brent crude fell further on the news. dropping to $74.36 a barrel.
Crude oil prices have fallen 30% since June on sluggish global demand and rising production from the US.Crude oil prices have fallen 30% since June on sluggish global demand and rising production from the US.
The fall is causing concern for members of the oil cartel, as most need a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel. 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."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.""They have significant financial assets that mean they can sustain a lower oil price. They can secure their budgets without a higher oil price."
On Wednesday, the Saudi Oil Minister, Ali al-Naimi, and his United Arab Emirates counterpart, Suhail bin Mohammed al-Mazroui, said they expected the oil market to stabilise itself.On Wednesday, the Saudi Oil Minister, Ali al-Naimi, and his United Arab Emirates counterpart, Suhail bin Mohammed al-Mazroui, said they expected the oil market to stabilise itself.
Saudi Arabia is the largest producer among the 12 members of the Opec oil producing cartel.Saudi Arabia is the largest producer among the 12 members of the Opec oil producing cartel.
"Most people are expecting nothing to come of this meeting in terms of a production cut," said Mr Wardell. "But Opec has been known to surprise people."
Analysis: Andrew Walker, Economics Correspondent in Vienna
Will they cut or won't they? I spent most of yesterday loitering in the lobbies of some of Vienna's plushest hotels (I am NOT staying in one of them) trying to get some clues from Opec ministers as they swept in or out.
Not much joy. The Saudi, Ali al Naimi was his usual charming but completely unrevealing self. He told us assembled hacks to be patient. So today it's a question of being patient in the Opec headquarters building.
Not so luxurious but rather easier to work in.
One view I have heard from analysts is that Opec will "kick the can down the road" and have to reassemble here before long.
Shale threatShale threat
Analysts suggest the Saudi strategy may be aimed at retaining dominance of the market in the face of increasing shale oil production in the United States. 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 United States.
The shale boom has been one of the drivers behind the decline in the oil price.The shale boom has been one of the drivers behind the decline in the oil price.
But as the oil price dips, shale becomes less economical to produce.But 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. So keeping oil prices low may in fact make sense for Opec.If oil prices are allowed to remain low for some time that could cap shale production over the longer term. So keeping oil prices low may in fact make sense for Opec.
"If Opec were to trim the production limit, it will therefore concede more market share to shale oil producers, so it is not in the best interest of its members in the long term," said Fawad Razaqzada at Forex.com."If Opec were to trim the production limit, it will therefore concede more market share to shale oil producers, so it is not in the best interest of its members in the long term," said Fawad Razaqzada at Forex.com.
"The Saudis want Opec to remain relevant,'' said analyst Phil Flynn. "The Saudis want Opec to remain relevant,'' said analyst Phil Flynn. "The only way in their mind is to subdue the US shale producer."
"The only way in their mind is to subdue the U.S. shale producer."
Opec accounts for a third of the world's oil sales.Opec accounts for a third of the world's oil sales.