By Mark Shenk
(Bloomberg) — Oil dropped to the lowest level in almost seven years following OPEC’s decision to abandon the group’s production limits.
Brent futures fell below $40 a barrel during trading for the first time since 2009. The Organization of Petroleum Exporting Countries set aside its output target of 30 million barrels a day and endorsed current output of about 31.5 million at its Dec. 4 meeting in Vienna. Money managers’ were the least- bullish on West Texas Intermediate oil in five years, according to government data for the week ended Dec. 1.
Oil has slumped about 40 percent since Saudi Arabia led OPEC’s decision a year ago to maintain output and defend market share by pressuring higher-cost producers. The lack of any limit on OPEC supplies could lift the lid on millions of barrels of additional crude from countries such as Iran next year.
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OPEC had a collective target of 30 million barrels a day since 2012. Most of the global market “doesn’t have any ceiling” on production, Iraqi Oil Minister Adel Abdul Mahdi told reporters after the meeting in Vienna. “Americans don’t have any ceiling. Russians don’t have any ceiling. Why should OPEC have a ceiling?”
After OPEC’s decision, “everyone does whatever they want,” according to Iranian Oil Minister Bijan Namdar Zanganeh. The Persian Gulf nation is seeking to boost crude exports by as much as 1 million barrels a day next year when international sanctions over its nuclear program are removed.
