Members of OPEC, the Organization of the Petroleum Exporting Countries, today fail to ratify a proposal by four Middle Eastern countries to boost the cartel’s output.
Saudi Arabia and three other states proposed earlier raising oil output by 1.5 million barrels a day, less than the amount OPEC itself said in a May report would be needed to meet higher demand.
However, delegates from other nations expressed opinions that the world market has enough oil, even with the loss of Libya’s 1.2 million to 1.5 million barrels a day of exports.
“The world remains well-supplied with oil, with ample spare capacity and adequate stock levels,” Mohammad Aliabadi, Iran’s acting petroleum minister said in his prepared opening statement as president of the OPEC session. Instead, he said, “excessive speculation in the futures markets increase volatility unrelated to fundamentals.”
“It was one of the worst meetings, we have ever had,” Saudi oil minister Ali al-Naimi later told reporters in Vienna, according to Bloomberg News. “We were unable to reach an agreement.”
Naimi stated that Saudi Arabia would continue to meet global demand. However, crude oil prices rose in New York and London nevertheless.
The 12 members of OPEC, including Iraq, together produced 28.84 million barrels a day in May, according to trade publication Argus Global Markets, accounting for about 40 percent of the world’s oil. Only a few of the countries, most notably Saudi Arabia, have excess production capacity. Saudi Arabia can produce as much as an additional 3.5 million barrels a day, according to various estimates.
The International Energy Agency issued a statement underlining “with disappointment that OPEC members today were unable to agree on the need to make more oil available to the market.”
The IEA said “of course what really matters is actual supply, which should move in line with seasonally rising demand, and we urge key producers to respond accordingly. Ongoing supply interruptions, as well as the unstable state of global economy, call for a prompt surge in supply on a competitive basis that will allow refiners to boost throughputs and meet rising seasonal demand.”
The agency warned that if OPEC disappoints to respond that “a further tightening in the market and potential increases in prices risk undermining economic recovery, which is in the interests neither of producers or consumers.”
