Lagos/Abu Dhabi: The producer of more than 40% of the world’s oil, Organization of the Petroleum Exporting Countries (Opec), agreed to keep production targets unchanged as ministers rejected calls for more supply, with crude prices near $90 (Rs3,546) a barrel.
Opec has agreed to keep an output target for 10 of its 13 members at 27.25 million barrels a day (bpd) and will meet again in January, said Nigerian oil ministry spokesperson Levi Ajuonuma.
Venezuela, Iran, Qatar and most other members had opposed a proposal to raise the quota by 500,000 bpd. Opec ministers are meeting on Wednesday in Abu Dhabi.
Crude oil rose on confirmation that the group won’t increase supply. Oil for January delivery on the New York Mercantile Exchange rose $1.33, or 1.5%, to $89.65 a barrel. Prices had fallen by more than $10 from a record $99.29 on 21 November and ministers, including Venezuela’s Rafael Ramirez, said that a decline means Opec should reject a US request for more oil.
“The case to raise production is not compelling for Opec,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “The outlook for demand in 2008 is uncertain and raising output may create a supply glut.”
Saudi Arabian oil minister Ali al-Naimi and Qatar’s Abdullah al-Attiyah had said in recent days that the market has enough crude. Opec agreed at its last meeting in September to raise output by 500,000 bpd starting 1 November—a move that failed to prevent last month’s rally.
Opec’s internal production watchdog committee recommended that the group maintain its current oil production targets, Iranian oil minister Gholamhossei Nozari said.
The ministerial monitoring committee, which comprises representatives from Iran, Nigeria, Kuwait and the Opec secretariat, met earlier on Wednesday in Abu Dhabi. Opec ministers are currently holding closed-door talks.
Oil prices are “very high” and ministers should respond, as energy costs increase and mortgage losses slow the economy, US energy secretary Samuel Bodman said on Tuesday in Washington, DC.
The group, scheduled to meet again in March, will probably have an extraordinary meeting in late January, several ministers said.
On Wednesday, Opec president Mohamed al-Hamli said speculation, refining bottlenecks and political events are partly to blame for high oil prices. He said Ecuador rejoined Opec, to become its 13th member.
According to a Bloomberg survey conducted this week, 23 out of 42 analysts, or 55%, had expected Opec members to maintain production at current levels. The rest expected an increase of between 500,000 bpd and 750,000 bpd.
“Opec will produce as much as required, but I don’t think it’s needed now,” Iran’s Opec governor Hossein Kazempour Ardebili said.
Deutsche Bank AG chief energy economist Adam Sieminski said that the exporter group’s “safest course” is probably to keep output targets steady and hold another meeting at its Vienna headquarters early next year.
Libya’s top oil official, Shokri Ghanem, said there’s no need for an increase in output because the market has sufficient oil.
On Tuesday, Ghanem said he is more concerned about fluctuations in the value of the dollar than oil prices, which he called “reasonable” in real terms. Oil exporting nations are paid in US dollars. Most Opec members have resisted calls by Iran and Venezuela for the group to price oil in other currencies.
Opec had 12 member countries pump 31.14 million bpd of crude a day in November, while the 10 members subject to quotas produced 27.09 million bpd, according to Bloomberg estimates published on Wednesday. Bloomberg
Nesa Subrahmaniyan in Singapore; Sean Evers, Fred Pals, Juan Pablo Spinetto and Maher Chmaytelli in Abu Dhabi; and Tina Seeley in Washington, DC also contributed to this story.