VIENNA: OPEC oil producers Wednesday agreed their first new production limit in three years in a deal that settles a 6-month-old argument over output levels in Saudi Arabia’s favor.

The Organization of Petroleum Exporting Countries agreed a new supply target of 30 million barrels daily, roughly in line with current production. It did not discuss individual national quotas.

The agreement caps output for all 12 OPEC members for the first half of the year, keeping supply near three-year highs – enough to rebuild lean global inventories.

“We’re not going to bypass it, we’re going to adhere to it,” OPEC secretary-general Abdullah al-Badri said of the new limit.

Higher supply from OPEC, mostly from Saudi Arabia and its Gulf allies, has kept a leash on oil prices.

Brent traded near $108 Wednesday, down from a year-high $127 in April. When OPEC met in June a proposal from Saudi Arabia for higher supplies was rejected, leaving Riyadh and its Gulf allies free to compensate for Libyan output lost to civil war.

Riyadh says it pumped 10 million barrels a day last month, its highest in decades in what delegates said was a demonstration of strength to the rest of OPEC. Now Saudi Arabia must decide whether to cut back to make room for rising Libyan output or keep the taps open to bring oil prices down below $100 a barrel.

“Someone has to cut back to accommodate Libya, that has to be done,” said analyst Lawrence Eagles of J.P. Morgan. “As always with OPEC the proof will be in the pudding. How closely will they stick to the new limit? The main issue for OPEC now is to accommodate rising Libyan production.”

“If the Saudis want to protect prices and maintain spare capacity – an issue which worries the market – then they would need to cut back,” said Amrita Sen of Barclays Capital.

“Iran raised no obstacle because they needed a deal and the deal effectively maintains current status quo.”

Price hawks Iran, Venezuela and Algeria, all of whom already pump at full capacity, failed to get a commitment from Saudi Arabia and its fellow Gulf producers to make room for the restoration of Libya’s supply.

“If Libya increases it doesn’t necessarily mean Saudi will cut,” said Saudi Oil Minister Ali al-Naimi.

“We don’t react to that, we react to market demand,” he said.

The price hawks want to keep oil prices above $100 a barrel.

“We think the present level is appropriate for producers and consumers,” Algerian Oil Minister Youcef Yousfi said of prices.

“Prices are reasonable,” said Iranian Oil Minister Rostam Qasemi.

Saudi and other Gulf producers would prefer lower prices to help nurture global economic growth. The UAE said that $80-$100 was preferable.

“Saudi Arabia is the central banker of the oil market and the decision that they will bring more oil to the market is definitely a good one,” said Fatih Birol, chief economist at consumer body the International Energy Agency.

With Libyan supplies rising, world oil inventories should increase if OPEC maintains output near current levels. OPEC’s secretariat calculates that 30 million barrels a day from OPEC will meet demand in the first half of the year and build stocks by 650,000 bpd.

According to the U.S. Energy Information Administration that would lift inventories among industrialized OECD nations from 56 days of OECD demand now to 60 days by the middle of 2012.

Meanwhile, Iran’s oil minister said that his Saudi counterpart had agreed not to up crude production to replace Iranian oil in case an international embargo on Iranian oil impacts Tehran’s ability to sell its petroleum. Ghasemi spoke outside of an OPEC meeting.

As those talks broke for lunch a senior member of Ghasemi’s delegation said OPEC oil ministers had agreed to keep present production at around 30 million barrels a day. He asked for anonymity because he wasn’t authorized to discuss confidential information with the media.

Ghasemi, the minister, said Naimi “rejects” replacing Iranian crude if Tehran faces oil sanctions over its refusal to stop activities that could be used to make nuclear arms.

The U.S. is reportedly seeking Saudi assurances that they are ready to make up for Iranian crude lost from the market should increased international sanctions on Iran impact its oil exports. Ghasemi said he spoke to Naimi Tuesday and Naimi “rejects” the notion “that he wants to replace Iranian crude if Iran faces sanctions “affecting crude sales or production.”

“We had a meeting about the bilateral relations with Naimi,” he told reporters minutes before the ministerial meeting was to start.

“It was very positive, we think, and friendly,” he added.

Naimi was circumspect, dismissing the issue as “speculative.”