The Organization of the Petroleum Exporting Countries (OPEC) has decided not to cut its oil production levels, despite a global crude oil glut that makes Brent price for January collapse to US$43/bbl. Saudi Arabia and Iran failed to agree on an oil output ceiling (the previous quota stood at 30 mb/d) and the OPEC dropped a production quota, until the next meeting in June 2016.
Large OPEC producers such as Saudi Arabia and Gulf countries are sticking to their strategy of defending their market shares, in spite of low prices (around US$38/bbl) covering only a fraction of their budget needs. Saudi Arabia would be prepared to consider a cut in production only if OPEC members Iraq and Iran agreed to cooperate and if non-OPEC members such as Russia agreed to join the production cut. However, Iran is not ready to curb its production and will discuss OPEC quotas only after having reached full output level (at least 1 mb/d), when and if Western sanctions are lifted in 2016. Iraq plans to raise its production in 2016, after having increased its 2015 production, and Russia is not willing to join common actions.
OPEC abandoned production quotas for individual members several years ago, inciting members to produce as much as they want and requiring coordinated action to reduce production levels.