Abu Dhabi: A crucial meeting of the Organisation of the Petroleum Exporting Countries (Opec) will take place in Vienna on Thursday amid falling oil prices and rising global supply. The member countries would discuss whether to cut production to increase prices.

Oil prices have been plunging for the past few months with Brent falling more than 30 per cent since June. From $115 (Dh422) per barrel, it came down to $78.05 on Wednesday. Analysts predicted the trend might continue even next year as the demand decreases in the market.

“Oil prices might move up gradually if Opec takes a decision to reduce production. The prices might remain in the range of $85 and $90 per barrel,” said Arjuna Mahendran, chief investment officer at Emirates NBD.

He said there might be a collective decision to slash production. “We are expecting a production cut of one million barrels per day by consensus among member countries. Saudi Arabia may not do it unilaterally and will ask other countries to join it in reducing the production.”

Countries like Venezuela who heavily depend on oil income might suffer if there is a cut in production, he added.

Talks between Saudi Arabia, fellow Opec member Venezuela and oil powers Russia and Mexico yielded no agreement on Tuesday on how to address a growing oil glut, Reuters reported.

Positive price reaction

UAE on Monday said the country’s investment in the oil sector will continue despite the drop in prices. Energy minister Suhail Mohammad Al Mazroui said this is not the first time the oil prices have decreased. He did not elaborate what would be the country’s position at Opec.

The country produces around 2.8 million barrels per day and is intending to increase the production to 3.7 million barrels per day by 2017.

Swiss bank UBS said in a report that if Opec does not cut production, there might be another slide in oil prices as markets interpret it as Saudi Arabia’s desire to either defend market share or punish non-Opec producers like Russia and US on its shale production. “But if an appropriate cut is negotiated, we expect a modestly positive price reaction, although scepticism as to compliance will likely mute the price reaction,” said the report.

Nearly one third of the world’s oil supplies are supplied by Opec, which has had a group output quota of 30 million barrels per day for the last three years.

Countries like Venezuela, Iran and Oman are likely to face budgetary difficulties if the oil prices do not rise.