LONDON: High oil stockpiles, slowing demand growth and a fragile world economy would normally give OPEC reason to consider supply cuts when it meets next month.
But with turmoil in the Middle East keeping the price of oil well into triple digits, OPEC delegates say the 12-member group is expected to stick with an output target of 30 million barrels per day agreed a year ago.
They also hope the Organization of the Petroleum Exporting Countries will contain tension over sanctions on Iran that have seen Tehran’s output plunge.
Indications are that Iran, under tightening U.S. and European sanctions over its nuclear work, is resigned to dramatically lower exports and will fly under the radar at the Dec. 12 meeting in Vienna.
“OPEC is facing a difficult year ahead. The world economy is weak and supply will be running ahead of demand, which could justify a cut of around 500,000 barrels a day,” said a senior OPEC delegate from the Gulf.
“But political factors will prevent OPEC from taking any formal action.”
With changes in the output ceiling unlikely, oil market management will be guided by OPEC’s leading producer Saudi Arabia – the only member with significant unused capacity – supported by the UAE and Kuwait.
A version of this article appeared in the print edition of The Daily Star on November 30, 2012, on page 5.