OPEC set to maintain oil output ceiling

December 04, 2013 - 2:51:16 pm

VIENNA: OPEC was expected to stick by its oil output limit at a meeting here on Wednesday, even as Iraq and Iran eye higher crude exports amid slashed Libyan production.

The Organization of Petroleum Exporting Countries does not see a need to alter the cartel's crude production ceiling of 30 million barrels per day, member nations led by the world's biggest oil producer Saudi Arabia said in Vienna ahead of the meeting.

Pumping about one third of the world's crude, OPEC will decide also on whether to replace Abdullah El-Badri as secretary general.

"We know demand is good, economic growth is good, supply is good," Saudi Oil Minister Ali al-Naimi told reporters at OPEC headquarters in the Austrian capital.

OPEC members Nigeria and Venezuela each said they believed the cartel would agree to maintain its crude oil production ceiling.

Oil market analysts were meanwhile not expecting any surprises from OPEC, whose dozen member nations from the Middle East, Africa and Latin America are together producing slightly below its output target.

"It is unlikely that OPEC will adjust its official notional production ceiling as it is unlikely that either Iran and Iraq can contribute incrementally in any significant manner to the cartel's supply next year," Harry Tchilinguirian, BNP Paribas' global head of commodity markets strategy, told AFP.

OPEC is facing also demand strains as consumers turn to cheaper oil and gas extracted from shale rock, particularly in North America.

At the same time, cartel members Iraq and Iran are seeking to increase their production after sizeable falls to output in recent years.

 

OPEC members welcome $100 crude oil

Saudi Arabia and other OPEC members argue that benchmark crude oil prices, currently averaging $100 per barrel, provide acceptable income for producers without weighing too heavily on consumers.

"The price of oil is acceptable and there will be some additional oil coming to the market from OPEC and outside OPEC," Qatar's Energy Minister Mohammed al-Sada said on Wednesday.

"What is more important is that this additional oil will be needed for the signs of economic recovery."

Sada added: "The current (output) situation seems to be comfortable... 30 million barrels seems to do justice to the current economic situation."

Iran's Oil Minister Bijan Zanganeh this week said that the country would be able to "immediately" export 4.0 million barrels per day (bpd) once sanctions are lifted in the wake of the international deal to roll back its nuclear programme.

Iranian crude oil exports have been slashed to about 1.2 million bpd from 2.5 million bpd in 2011, according to Zanganeh.

At the same time, Iraq's Oil Minister Abdelkarim al-Luaybi said his country hoped to export 3.4 million bpd of crude oil next year, including 400,000 bpd from Iraqi Kurdistan, as it looks to recover from years of bloodshed.

This compares with exports of 2.38 million bpd in November.

The market though doubts how quickly new production can come on board.

"OPEC will find it very hard to come to an agreement to cut production given a significant number of its members -- Iran, Iraq, Libya, Nigeria -- are suffering from constrained production," said Thomas Pugh, commodities analyst at Capital Economics consultants.

Libya's output has plunged to about 250,000 bpd amid deadly fighting between radical Islamist fighters and the army, but oil minister Abdelbari al-Arusi said he hoped production would be back to its normal level of 1.5 million bpd within two weeks.

Nigeria is meanwhile facing regular acts of sabotage to its oil pipelines.

Saudi Arabia is battling against Iraq and Iran for the position of succeeding El-Badri, who has steered the cartel through the financial crisis in the role of administrative head since 2007.

OPEC voted in December last year to re-appoint the Libyan for another year after members failed to agree on a new secretary general. (AFP)

 

 

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