Opec leaves production levels unchanged

Opec oil ministers have decided to keep their production quotas unchanged, declaring the world market remains “well supplied” and prices are at a satisfactory level.

However, concerns were voiced about the weak dollar at a meeting in Vienna on Thursday and Abdalla El-Badri, the cartel’s secretary-general, urged member countries to adhere to output cuts fixed in December 2008, saying compliance averaged just 61 per cent.
The 11 Opec members subject to quotas – Iraq is exempt – produce 26.8m barrels a day. The ministers said the market remained well supplied and they had decided to leave production levels unchanged.

They pointed to factors that may cause oil prices to fall, noting low “refinery utilisation rates” and high inventories as well as the fragile world economy.

They are next due to meet in Ecuador in December.

Ali Naimi, the Saudi oil minister, said: “The biggest challenge we have is to keep the oil market as it is today.” He added: “I hope we don’t have a double dip. Everybody is working very hard to avoid it.”

Mr Badri underlined Opec’s approval with current oil prices: the cartel’s basket of 12 crudes was at $80.90 on Wednesday. “Prices are not high, prices are comfortable,” he said. “Remember that we encourage a fair price where we can have a decent income and where we can invest in new supply and where consumers are comfortable.”

But Mr Badri added that Opec was watching the dollar’s decline, which is likely to drive up prices. “They are concerned about the dollar situation,” he said. “The whole world is watching what is happening.”

Members are generally failing to comply with a total quota of 24.85m barrels per day, with current output some 2m b/d above this ceiling. Independent data suggest none of the members followed individual limits last month. Nigeria and Angola were the worst offenders.

Opec members are generally failing to comply with a production cut of 4.2m b/d agreed in Algeria in December 2008. That meeting fixed a total quota of 24.85m b/d, but current output by the 11 countries party to the agreement is some 2m b/d above this ceiling.

“We still need to work hard to improve that compliance,” said Mr Badri. “A decision has been taken, we have to adhere to it. If we want to change it, we have to change it together.”

Independent estimates suggest compliance with the production cut ran at only 53 per cent last month, well below 61 per cent.

Iran, Opec’s second-biggest producer, takes on the chairmanship from Ecuador. Its daily production has fallen from an average of 4.2m b/d in 2005 to 3.7m b/d last month. But Masoud Mir-Kazemi, the oil minister, claimed international sanctions were having “no impact at all on production, not only for crude oil, but not even for gasoline”