World oil prices plunged to below $60.00 a barrel in New York and London after the Organisation of Petroleum Exporting Countries decided — as expected — to keep official production at 28.0 million barrels a day.
However analysts said that the sharp oil price drop was mainly due to official data that showed US crude oil inventories were at their highest level in nearly seven years.
Prices had traded at almost $64.00 a barrel in New York just last Friday as tensions continued within key energy producers Iran and Nigeria and concerns that may prompt OPEC to decide against cutting output.
Attacks by militants on the country’s oil installations have forced a 20 percent cut in Nigeria’s crude production.
Nigeria is Africa’s biggest producer of crude and a member of OPEC.
OPEC tends to reduce its crude production during the second quarter in response to lower demand for heating fuel following the end of the northern hemisphere winter.
But in its communique following the Vienna meeting it said: “Although all indicators show that the market is fundamentally well-supplied with crude oil… prices remain volatile, these being driven by geopolitical factors and associated concerns regarding potential future supply disruptions.”
OPEC said that it had decided to maintain the current production ceiling “in order to contribute further to market stability and robust global economic growth, as well as maintain prices at levels reasonable to both producers and consumers”.
OPEC will review its oil output when it meets again on June 1 in member-nation Venezuela.
But some energy ministers have indicated that it could hold a review of the latest quotas in late April on the sidelines of the 10th International Energy Forum in Doha.
The cartel’s latest meeting was dominated by concern over the potential impact on the market of Iran’s nuclear standoff with the West.
Speaking after OPEC had maintained its output, Iranian Oil Minister Kazem Vaziri-Hamaneh gave assurances that the second biggest producer in OPEC would not halt its oil exports, even if hit by economic sanctions over its nuclear program.
But a top Iranian security official, also speaking in Vienna, said Iran would have to “review” its policies in case the political environment changed.
Among OPEC’s members, only Venezuela had called publicly for a cut of 500,000 barrels a day, arguing that the oil market was oversupplied.
The cartel is actually producing more than 29 million barrels of crude a day including output from Iraq, which is not included in the official quota.
New York’s main contract, light sweet crude for delivery in April, dived $2.03 to $59.55 a barrel in pit trading.
In London, the price of Brent North Sea crude for April delivery sank $1.67 to $59.50 a barrel in electronic deals.
OPEC, which is headquartered in Vienna, has Saudi Arabia as its biggest producer followed by Iran, Venezuela, Kuwait, the United Arab Emirates, Iraq, Nigeria, Libya, Indonesia, Algeria and Qatar.