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 today in Vienna.
The group 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. The 30 million barrel-a-day limit is for all of OPEC’s 12 member nations, including Iraq and Libya, United Arab Emirates Oil Minister Mohamed al-Hamli said after the meeting ended.
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 Libyan exports. OPEC will need to produce 30.1 million barrels a day next year to balance world supply and demand, its secretariat forecast yesterday.
World Economy Concern
“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.”
An OPEC press conference is scheduled for 2 p.m. local time. 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.
All 12 OPEC members collectively produced 30.37 million barrels a day last month, according to OPEC’s own monthly report published yesterday. Excluding Iraq, the 11 nations previously subject to quotas pumped 27.69 million barrels a day, according to OPEC, which uses secondary sources, such as analysts and news agencies, for its survey.
Earlier today, 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.
Brent crude for January delivery fell $1.11 to $108.39 a barrel as 1:11 p.m. London time in electronic trading on the London’s ICE Futures Europe exchange. Prices are up 14 percent this year.
The group’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.