OPEC may extend output ceiling
OPEC may extend output ceiling
ABU DHABI (AFP): OPEC oil ministers meeting in Indonesia this
month will likely extend the cartel's official production ceiling
to support sagging oil prices, the official Emirates news agency
said yesterday.
It said the rollover of the 24.52 million barrel per day (bpd)
ceiling, in force for nearly 13 months, would push up prices by
more than US$2 because of high seasonal demand in the first
quarter of 1995.
"Contacts among members of the Organization of Petroleum
Exporting Countries as well as market factors have produced
indications that the oil ministers will take a decision to extend
the current output ceiling," it said.
"Their only mission will be whether to fix that ceiling for
the first quarter of 1995 or the first half."
OPEC's 12 oil ministers will meet in the Indonesian island of
Bali on Nov. 21 to set fresh production levels and elect a new
secretary general after the three-year term of Subroto of
Indonesia expired in June.
The present ceiling has been in force since September 1993 but
oil prices have remained far below OPEC's target of US$21. In
March, they dipped to $13 before they recovered to around $16.
Nigerian minister of state for petroleum and mineral
resources, Alhaji Umaru Baba, said during a Gulf tour this week
that crude prices could rise by $2 a barrel if OPEC extended the
ceiling and complied with production.
Independent estimates showed the organization was producing
around 300,000-400,000 bpd above its ceiling. But the figure is
dwarfed by massive quota violations in the past few years.
Low oil prices have hurt Gulf states most as they depend
heavily on crude exports. Saudi Arabia, the world's top oil
producer and exporter, and other Gulf oil heavyweights were
forced to slash spending in the past two years to cut budget
deficits, leading to a slowdown in their economies.
"The decision to extend the production ceiling will boost oil
prices by $2 or more and at the same time it shows that OPEC has
entered a new stage of chalking out policies that serve the
interests of all," WAM said.
"This is a significant step by OPEC towards realizing its
objectives for reaching a price of $21. According to several OPEC
ministers, the Bali conference is expected to be easy as it will
be a continuation of the organization's new policy."