Deal marks group’s first production hike in three years, aims for market balance
OPEC decided to
increase its production ceiling to 30 million barrels a day, the first change
in three years, moving the group’s supply target nearer to current output.
“We have an
agreement to maintain the market in balance and we’re going to adjust the level
of production of each country to open space for Libyan production,” Venezuelan
Energy Minister Rafael Ramirez said after the Organization of Petroleum
Exporting Countries meeting ended Wednesday in Vienna.
The group agreed to
the new limit though it won’t set individual quotas for each member nation, a
person with knowledge of OPEC policy said earlier today while the ministers
were still in talks.
OPEC is raising its
quota to more closely match actual production while at the same time gauging
the possibility of a slowing global economy and rising Libyan supply. Its last
meeting in June broke up without consensus when six members including Iran and
Venezuela opposed a formal push to pump more oil by Saudi Arabia and three
other Gulf nations, who went ahead with an increase to make up for halted
OPEC will need to produce 30.1 million barrels a day next year
to balance world supply and demand, its secretariat forecast yesterday.
“We are faced with the prospect of a world
economy which could swing either way in the coming months,” Iranian Oil
Minister Rostam Qasemi, who is also president of OPEC until the end of this
year, said in an opening speech at OPEC’s Vienna headquarters for the 160th
ministerial conference. “It could enter a welcome period of sustainable
economic recovery or return to a new downturn or even recession.”
Saudi Arabian Oil
Minister Ali al-Naimi declined to comment after the meeting ended. Earlier
today he said he expected a “great agreement” within OPEC today. He had
previously described OPEC’s June meeting at the worst ever.
OPEC last set a
quota in December 2008 at a meeting in Oran, Algeria, when the group announced
record supply cuts. The 11 members that are subject to limits last month pumped
2.81 million barrels a day more than the 24.845 million-barrel agreed ceiling,
a Bloomberg survey showed. Iraq is not bound by quotas.
According to OPEC’s
own monthly report published yesterday, those 11 nations pumped 27.69 million
barrels a day in November and once the figure for Iraq is included, the
12-nation total rises to 30.37 million barrels a day. OPEC uses secondary
sources, such as analysts and news agencies, for its survey.
Venezuela’s Ramirez had contradicted other OPEC by saying that the organization
was not discussing a new higher production limit of 30 million barrels a day.
Crude for January
delivery fell $1.44 to $98.70 a barrel as of 12:37 p.m. London time in
electronic trading on the New York Mercantile Exchange. Prices are up 8 percent
this year after climbing 15 percent in 2010.
The group’s 12 members
are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi
Arabia, the United Arab Emirates and Venezuela.
Its a smart move by OPEC I wonder how long the process took to find consensus. Independent producers as Canada is move very quickly on production models to reflex global demand. Currently policy is, as much they can ,as fast as they can, to who ever they can. The Iconic OPEC has been a great role model for Canada, as its dominant control of this energy sector overwhelming and provides many learning models.