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OPEC Ministers Opt Against Output Hike Despite Calls For More Oil

June 11, 2014

Vienna (Alliance News) - Oil ministers of the Organization of the Petroleum Exporting Countries decided Wednesday in Vienna not to raise the cartel's production ceiling, despite calls to respond to growing oil demand.

"We have a very comfortable price and the market is very stable," cartel Secretary General Abdalla Salem el-Badri said, "so everyone is happy."

OPEC's basket price has been hovering at around 105 dollars per barrel for the past months and stood at 105.89 dollars on Tuesday, according to the latest available price quote.

The International Energy Agency, which is financed by industrialized countries, stated in May that growing seasonal demand would require OPEC to pump an average 900,000 barrels per day more during the third quarter than the 29.9 million bpd it had produced in April.

However, analysts say OPEC's biggest producer, Saudi Arabia, would likely boost its output if demand grows.

"If customers want our goods, they'll get them," Saudi Arabian Petroleum Minister Ali Naimi said in Vienna.

"No one but the Saudis have the capacity to increase production substantially," said Ehsan Ul-Haq, an analyst at the British energy consultancy KBC.

OPEC's members have had problems meeting that target so far this year because Iranian oil is still subject to international export sanctions and Libyan production has dwindled amid unrest in the country.

In addition, no oil has been exported from northern Iraq for several weeks following an attack on a pipeline, while sabotage of petroleum infrastructure has also led to lower output in Nigeria.

El-Badri said that other OPEC members would adjust their production once these countries ramp up production.

"At the end of the day, we'll accommodate production of Libya for sure," as well as that of the other countries that currently produce below their capacity, he said.

If the current nuclear talks between Iran and six world powers produce an agreement by July, as planned, Iranian Petroleum Minister Bijan Namdar Zangeneh said that his country could soon boost production.

At the same time, he made clear that the additional oil would come to the market in phases.

"If the sanctions are lifted, very soon we can produce half a million barrels and increase our output, and after some months we can produce another 200,000 barrels and reach 4 million barrels," he said.

The European benchmark price for Brent North Sea oil rose slightly ahead of the expected OPEC decision, by 0.4 dollars to 109.92 dollars per barrel. The US brand West Texas Intermediate stood nearly unchanged at 104.33.

OPEC's 12 member Middle Eastern, African and Latin American members account for a third of global oil production.

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Source: Alliance News

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