OPEC, which supplies about 40 percent of the world’s crude, kept its production target unchanged in a widely anticipated move that left the group’s output below forecast demand for the rest of the year.
The Organization of Petroleum Exporting Countries reaffirmed yesterday its production ceiling of 30 million barrels a day for a fifth consecutive meeting. The group forecasts demand for its crude of 30.4 million barrels a day in the coming six months, while its 12 members produced 29.6 million barrels a day in April, the organization’s data show.
OPEC ministers said at a meeting in Vienna that they were at ease with supply and demand in global oil markets. While the formal limit remains unchanged, the burden will fall to Saudi Arabia to increase output to meet higher demand in the second half as political turmoil constrains Libyan output and sanctions curb Iranian exports, according to Barclays Plc, Societe Generale SA and Energy Aspects Ltd.
“This meeting was to be a non-event and it is,” Olivier Jakob, managing director of Petromatrix GmbH, a Zug, Switzerland-based consulting firm, said by e-mail yesterday. “Saudi Arabia likes the lack of price volatility and the outright price. They want to keep it that way as long as possible.”
Brent crude, the international benchmark, traded for $109.92 a barrel at 4:55 p.m. on the ICE Futures Europe exchange in London yesterday. It has averaged about $110 a barrel every year since 2011.
“The relative steadiness of prices during 2014 to date is an indication that the market is adequately supplied,” OPEC said in a statement following the meeting. Growth in oil demand this year will be covered by production growth in countries outside the group, it said.
“We don’t need to worry about anything, this is the best time for the market,” Ali al-Naimi, Saudi Arabia’s oil minister, told journalists in a briefing before the meeting began. “Everything is good, stable and everyone is happy.”
The International Energy Agency, the Paris-based adviser to 29 nations, recommended on May 15 a “significant rise in OPEC production” to meet its forecast of demand for the group’s crude, known as the call on OPEC, of 30.7 million barrels a day in the second half of the year. Oil inventories in advanced nations were at 2.62 billion barrels in April, the lowest for that month since 2008, the year Brent reached a record $147.50 a barrel, IEA data show.
In Libya, output has fallen to a 10th of pre-conflict capacity because of protests at oil fields and strikes at export terminals. Iran faces an end in July to relief from sanctions, which have reduced oil exports, if it cannot reach a broader deal on its nuclear program.
“I think the third quarter is going to be pretty tight again,” Johannes Benigni, analyst at JBC Energy GmBH, said in an interview in Vienna. “The market needs OPEC oil and we see the call on OPEC increasing.”
Saudi Arabia is able to sustain production as high as 12.5 million barrels a day, compared with current output of 9.7 million, al-Naimi said.
OPEC Secretary General Abdalla El-Badri said at a press briefing that his tenure has been extended for six months to June 30 2015. His current term, already extended by two years, was due to finish in December. OPEC will choose a successor to el-Badri when it meets next on November 27, Venezuelan Oil Minister Rafael Ramirez told reporters.
Current candidates for the position are Saudi Arabia’s Majid al-Moneef, Iran’s Gholamhossein Nozari, and Iraq’s Thamir Ghadhban. The potential candidacy of Nigerian Petroleum Minister Diezani Alison-Madueke was also raised at yesterday’s meeting, Bijan Namdar Zanganeh, Iran’s minister of petroleum told reporters.
Alison-Madueke said before the meeting that “I didn’t decide to throw my name in the hat. It’s not on the agenda.”
A Nigerian candidate could break a deadlock over who should replace El-Badri, Iraqi Oil Minister Abdul Kareem al-Luaibi said in a press briefing June 10.
The 12 members of OPEC are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
The April oil-production figure of 29.6 million barrels a day from OPEC is from data gathered from secondary sources. The group’s members’ own estimates for their output in March amounted to 30.5 million barrels a day, OPEC data show.