OPEC agrees to keep oil-production ceiling unchanged
OPEC Thursday agreed to maintain its existing oil-production agreement, said people familiar with the matter, but several members signaled that the group could meet again soon if oil prices retreat much more, The Wall Street Journal reported.
The Organization of Petroleum Exporting Countries kept its combined production ceiling for its 12 members at 30 million barrels a day, an outcome that had been telegraphed earlier this week following a bilateral meeting between ministers from Saudi Arabia and Iran, who lead rival factions within OPEC.
The group remained in a closed-door meeting to discuss other matters after members decided to keep the production ceiling unchanged, people familiar with the matter said.
"They have agreed to keep the ceiling at 30 million barrels a day," a non-Gulf delegate said.
But several members, before the meeting, pointed Thursday to the possibility of an emergency meeting should oil prices, which have fallen more than 20% in recent weeks amid concerns about weak global economic growth, retreat much more.
Kuwait oil minister Hani Abdulaziz Hussain, who is considered one of the group's more consumer-friendly members, told reporters prior to the meeting that oil prices around $100 a barrel are "acceptable and reasonable" and that the group could meet again if oil prices slip below $90 a barrel.
Iranian oil minister Rostam Ghasemi said he was satisfied with oil prices between $100 and $120 a barrel. "If prices go down further, definitely we will have a meeting," he said.
As is often the case at OPEC meetings, Thursday's agreement to maintain current output comes against a backdrop of uncertainty in the oil market. This time, the key questions concern the effect of economic weakness on oil demand and the issue of just how much Iranian oil will leave the oil market due to international sanctions on the Islamic Republic.
In recent months, OPEC members have been pumping well above the production ceiling of 30 million barrels a day set at the group's last meeting in December. OPEC members in May pumped close to 31.6 million barrels a day, according to the OPEC monthly report this week, citing secondary sources. Those figures include Saudi output of around 9.9 million barrels a day, an extremely high level.
The lofty Saudi output follows lobbying of Saudi Arabia by the U.S., the European Union and others to raise output in anticipation of sanctions on Iran.
Other OPEC members this week expressed criticism of Gulf countries for boosting output so aggressively despite the weakening economy.
Credit Suisse this week warned that oil prices could fall steeply if the euro-zone crisis instigates a severe credit crunch.
In the bank's worst-case scenario, which sees a repeat of the 2008 recession, the price of oil would tumble to $50 a barrel and would fail to recover much beyond $80 a barrel for the next few years, it said in a note released Wednesday.
Venezuelan oil minister Rafael Ramirez earlier this week vowed to press Gulf countries on their "overproduction."
"It will have to be reduced," Ramirez said Tuesday.
Because of this excess supply, "We are worried about the stabilization of the price. The price has lost $30 in two months. We believe that the price has to be over $100 a barrel," Ramirez said.