OPEC to keep quota as revenue tops $1 trillion

OPEC members are unlikely change the oil output in their next meeting next week. (AP Photo)

OPEC will probably keep its output quota unchanged for a second successive meeting next week as members judge prices high enough to cover their spending needs, according to a Bloomberg survey.

All 17 analysts in the survey conducted from Nov. 29 through Monday said there will be no change to the collective ceiling of 30 million barrels a day agreed on almost a year ago. Ministers from the Organization of Petroleum Countries are due to gather in Vienna on Dec. 12. The 12 nations pump more than 40 percent of the world’s oil, earning revenue of more than $1 trillion a year, according to OPEC data.

Brent crude has stayed within a range of $104 to $118 a barrel since early August as traders balance the possibility of weakening global demand against political tension in the Middle East, where one third of the world’s oil is produced. The benchmark gauge, used to price a majority of the world’s crude, has averaged $111.87 this year, within 1 percent of 2011’s mean of $110.91.

“All they need to do, and all they will do, is the usual rhetoric about balancing the market – that the world has enough oil but not too much,” said Mike Wittner from Societe Generale SA in New York.

Most countries within OPEC are already pumping at much as they can. Saudi Arabia has the most spare capacity, about 2 million barrels a day, according to the International Energy Agency. Iran is unable to find enough buyers for its crude because of European Union and U.S. sanctions, leaving about 500,000 barrels a day unused, IEA data show.

“Supply is fine,” Qatari Energy Minister Mohammad al-Sada told reporters in Doha Monday. “Supply is at very comfortable levels and it’s reflected by the reserves worldwide.”

While the organization is unlikely to alter its quota, “OPEC will express concern over demand prospects for 2013 and will claim a willingness to respond rapidly to market changes,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.

Actual production from the 12 OPEC nations has exceeded the group’s official ceiling all year, peaking at 32.4 million a day in August, before receding to 31.5 million in November, according to monthly Bloomberg surveys of producers, companies and analysts.

Saudi Arabian Oil Minister Ali al-Naimi said on Oct. 9, when Brent crude traded near $112 a barrel, that prices were “still high” and that his country would prefer a level closer to $100.

Missile attacks between Israel and the Gaza Strip have elevated oil prices in recent weeks since the Nov. 14 killing of Ahmad al-Jabari, the leader of Hamas’ military wing.

“Tremendous uncertainty in the Middle East is going to balance oversupply and economic gloom,” Chakib Khelil, a former Algerian energy minister who is now an energy consultant in Paris, said by phone Monday. “People are fearing supply disruptions, crisis in Kuwait, crisis in Bahrain, in Syria, big problems in Iraq. I don’t see prices going down in the medium term.”

Iraq was included in OPEC’s collective ceiling when it was set at the end of 2011, though the organization no longer publishes quotas for individual nations as it did a few years ago. Aided by investment from foreign oil companies, production in Iraq expanded 13 percent last year and has leapt a further 24 percent so far this year.

A version of this article appeared in the print edition of The Daily Star on December 05, 2012, on page 5.




Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (

comments powered by Disqus



Interested in knowing more about this story?

Click here