OPEC: Gulf states reject calls to cut oil production

Gulf Arab states are likely to reject calls from other members of OPEC to cut downproduction because of  fears that they will lose their significant market share if they do.

OPEC is due to meet next week in Vienna with the record four year low oil price leading the agenda.

Prices dropped further on Thursday, with Brent falling to $77.70, as the traders deemed that a drop in production is unlikely.

The four Gulf states, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates, pump 16.2 million barrels of crude oil per day, 52 percent of 12-member OPEC's total production. However, they account for two-thirds of the oil cartel's total exports.

This means that any reduction in production would have to be led by the four states, yet they are fearful that any gap left by a reduction on their part would simply be filled by another producer - thereby reducing their market share.

"It is extremely unlikely for Gulf states to accept output cuts unless other OPEC members take the initiative... They need assurances other OPEC or non-OPEC producers won't fill the gap," said Kuwaiti oil expert Kamel al-Harami.

"It is not in the interest of the Gulf states to cut output because they risk losing highly valuable market share," al-Harami added.

OPEC members such as Iran and Venezuela have been especially pushing for lower production that they hope will lead to higher oil prices.

"We believe that the prices are at a very low level and instability in the market is in no one's interest," Rafael Ramirez, Venezuela's representative at OPEC, said earlier this week.

A slump in demand, thanks to a sluggish world economy, a sharp rise in output from sources like shale oil, and a strong dollar have led to the low oil prices.

OPEC members whose budget is heavily dependent on oil have felt this drop acutely.