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Opec is set to continue pumping oil at its current high levels well into 2016 as Saudi Arabia and its GCC allies prioritize market share over price. The likely lifting of sanctions on Iran in early 2016 will also see fresh Opec volumes enter the market (see p7 ), although Opec’s historical high-watermark of 32.58mn b/d, set in August 2008, is unlikely to be troubled. The group’s Secretary-General ‘Abd Allah al-Badri attributed the decision not to set a production ceiling at its 4 December meeting to uncertainty over Iranian production growth.
With crude prices again setting new lows in the final days of 2015 – Brent fell to a new 11-year low of $36/B on 22 December, and may yet fall further before the year is out – there are growing indications that non-Opec production is being driven out, which will provide succor to the Saudi-led strategy. Although Opec is therefore set to enjoy market share growth in 2016, oil revenues will remain low, and the group’s cohesion will continue to suffer.
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