The city of Vienna saw the 156th meeting of representatives of OPEC (Organization of the Petroleum Exporting Countries). They decided not to make any changes in production quotas or oil prices, and praised the current world crude oil price of about $80 as high enough to encourage new exploration and production and low enough to avoid killing the global economy’s fragile recovery.
There were earlier expectations that OPEC will keep its policy the same towards oil industry, “The price has stayed very well in the range of $70 to $80. It is in a very happy situation, there are no shortages, investment is going on, demand looking forward is going to continue to rise, so everyone is happy,” said Ali Al Naimi on the eve of the meeting, according to Bloomberg News.
Some countries still remain in difference and want more, “Angola is again complaining that it should be free of quota; Nigeria is again complaining that it should have a higher quota. Nothing will be changed for them, but OPEC compliance at current world market prices will continue to trend lower, and the date for the next meeting is likely to be set sufficiently far in 2010 to allow most OPEC members to produce at zero compliance and bring Saudi Arabia back to its favored role of being the sole swing supplier to the world,” said energy analyst Olivier Jakob from Petromatrix, before the meeting.
“We tried to push but not that much,” said OPEC Secretary General, Abdalla Salem El Badri, when asked whether OPEC cheaters were pressured to cut back on their output. “The situation in the world economy and the situation in the world prices make it comfortable for everybody,” added El Badri.
China’s booming economy is one of the few sources of new demand for oil; another is in OPEC members’ economies, where fuel prices are heavily subsidized, but oil production capacity continues to edge up in many places, such as Iraq, Angola and offshore Nigeria. Abu Dhabi and Kuwait are also planning production projects.
“Financial concerns are another key factor; oil prices are relatively high because investors have been buying oil and other commodities because they expect the value of the U.S. dollar to decline,” said Roger Diwan, an oil expert at PFC Energy.
A statement at the end of the meeting said members also reiterated their commitment to honoring individual production quotas. Overproduction is now at nearly 2 million barrels a day (bpd), making OPEC now pumps about 27 million bpd.