OPEC to increase production target by 1m barrels<\/p>\n
Matt Moore, Associated Press, Vienna<\/p>\n
OPEC defended its decision to increase its oil production
\ntarget by 1 million barrels a day later this year, despite
\ncriticism that the move was more symbolic than significant given
\nthe cartel has been exceeding the new quota since the beginning
\nof the year.<\/p>\n
Indonesia's Purnomo Yusgiantoro, OPEC's president, said the
\ndecision, which was a consensus of the 11 members of the cartel,
\nwill take effect Nov. 1.<\/p>\n
\"It's a gesture of goodwill to the consumers that we want
\nlower prices,\" Algerian Oil Minister Chakib Khelil said.<\/p>\n
But Leo Drollas, chief economist at the London-based Center
\nfor Global Energy Studies, said the decision was irrelevant.<\/p>\n
\"It's a PR exercise to prove to the consumer that OPEC
\nactually likes them, \" he said. \"It's not going to help the
\nmarket at all.\"<\/p>\n
The move will increase OPEC's self-imposed output limit for
\nall its members, except Iraq, from 26 million barrels a day to 27
\nmillion barrels, but the cartel is already producing 27.4 million
\nbarrels and accounts for one-third of the world's oil supply.<\/p>\n
Crude prices in New York and London climbed to record highs
\nearlier this summer, but have eased in recent weeks.<\/p>\n
A proposal by the cartel's board of governors to increase the
\nprice band for its basket of crudes, currently at $22 to $28,
\nwill be made at a meeting Dec. 10 in Cairo, Egypt. Prices have
\nlong been well above the upper end of the band, which is the
\ncartel's preferred selling range. OPEC's basket price, currently
\nin the $39 a barrel range, is lower than prices in the U.S.
\nbecause that market require a higher grade of product.<\/p>\n
Some countries, including Nigeria and Libya, had sought an
\nincrease in the band along with production targets.<\/p>\n
Purnomo said the consensus by OPEC members was to wait until
\nCairo to make a decision. He did say why when asked.<\/p>\n
Energy economist and industry analyst A.F. Alhajji said Libya,
\nNigeria and Venezuela had sought a price band increase for
\neconomic reasons.<\/p>\n
\"(They) want higher price bands because they don't have spare
\ncapacity and, subsequently, higher prices mean more money for
\ntheir coffers,\" he said.<\/p>\n
Saudi Oil Minister Ali Naimi reiterated that prices for oil
\nremained too high in the wake of voracious demand by China and
\nthe United States. He said Saudi Arabia has 1.5 million barrels
\nof spare capacity.<\/p>\n
Abdullah bin Hamad al-Attiyah, Qatar's oil minister, said that
\nraising the output target would result in stability.<\/p>\n
\"We believe that there is more oil in the market, we believe
\nthat all this production will give more stability to the market,\"
\nhe said.<\/p>\n
Purnomo said OPEC has 1.5 million barrels of spare capacity
\nthat it can put on the market when needed.<\/p>\n
\"Saudi Arabia will be able to do it and some of the other Gulf
\ncountries should be able to do it,\" he told reporters.<\/p>\n
The decision doesn't apply to significant oil producers like
\nRussia and Norway, the world's second- and third-biggest
\nproducers who are not OPEC members.<\/p>\n
Purnomo urged them to follow OPEC's lead, but Russian Oil
\nMinister Andrey Greus didn't commit.<\/p>\n
\"We are interested in the stability of prices and more
\npredictability,\" he said through a translator.<\/p>\n
Thorhild Widvey, Norway's oil minister, who will speak to OPEC
\nthis week, has said the Nordic country, which produces
\napproximately 2.9 million barrels a day, has no spare capacity.<\/p>\n
World demand for oil has been voracious, led in part by
\nChina's expanding economy and continued demand in the United
\nStates. Oil prices have soared because of the extremely thin
\nmargin of spare output capacity worldwide and fears of supply
\ndisruptions around the globe.<\/p>\n
OPEC's director of research, Adnan Shihab-Eldin, said he
\nthought oil prices weren't on a permanent move upward.<\/p>\n
\"Once geopolitical concerns subside, we believe that these
\nshifts will subside. We have to be patient, to wait,\" he said,
\nadding that crude stocks \"will definitely be normal in the coming
\nwinter.\"<\/p>\n
OPEC will meet with energy industry leaders, including oil
\ncompanies and agencies, on Thursday and Friday. The cartel's next
\nregular meeting will be in Iran in March.<\/p>",
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"sponsor": "Okusi Associates",
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