Change in OPEC production

Iran's Governor at the Organization of Petroleum Exporting Countries Mohammad Ali Khatibi, whose country holds presidency over the oil cartel, said the organization is most likely to keep its oil production quotas unchanged at its next meeting in December."Oil producers and oil consumers are satisfied with (the) current level of prices," Mohammad Ali Khatibi said. "It is predicted most of the OPEC members to be in agreement with maintaining (the) current level of oil production at the next meeting of the organization in December," he said. Iran and a majority of the 12-member organization want the OPEC output to remain at the current level, given the growing economic recession in the West and most consumer countries. OPEC is concerned global demand may fall as the economic slowdown in the United States and Europe spreads. The price of a barrel of oil is trading near its lowest point in a year in New York because of fears of a double-dip global recession. New York's main contract, WTI light sweet crude oil for delivery in November, added 39 cents to close Friday at $82.98 a barrel. Brent North Sea crude for November in London trade rose 15 cents to settle at $105.88. The gradual return of Libyan oil production was also bolstering oil supplies. Saudi Arabia and Kuwait this year stepped in to fill the oil output gap left by Libya's conflict, which closed oil fields and depots and added to volatility in the sector. Libyan production resumed mid-September and was now at 350,000 barrels per day, according to the Nicosia-based Middle East Economic Survey. "After cessation of oil exports from Libya, unfortunately some OPEC members increased oil production unilaterally. But Libya has resumed oil production now and it is projected its production to reach 500,000 barrels per day in (the) next few weeks," Khatibi said. Khatibi said members of the world oil cartel which boosted oil production to compensate for the loss of Libyan supply earlier this year must reduce output as Libya returns to world markets. "When the economic situation of industrial countries is not good and it is not likely for the oil price to surge, the oil price is at risk and management is necessary," he said. "When oil demand falls and supply remains the same, oversupply can affect prices and it is necessary to manage the supply," Khatibi said. "Those member countries in OPEC which increased their output when Libya's oil was not in the market should decrease their oil production when this country's oil returns to the market," he said. "Continuation of oversupply by these countries will pressure prices," he warned, and added, "These countries are not capable of tolerating oil prices below $90/barrel." Khatibi did not say which countries should rein in production. A few OPEC members boosted output in recent months as the uprising in Libya slashed Libyan production from close to 1.6 million b/d to virtually nothing. But OPEC kingpin Saudi Arabia accounted for the biggest increase. A senior Persian Gulf source said last week that Saudi Arabia was currently pumping around 9.8 million b/d -- 1.8 million b/d more than its quota under the previous output pact which became redundant in June. Estimates show OPEC production falling to 28.84 million b/d in April from 29.57 million b/d in January, but then rising in subsequent months to 30.13 million b/d in August. Saudi Arabia's submissions to the Riyadh-based International Energy Forum's database show Saudi crude production climbing from 8.514 million b/d in January to 9.756 million b/d in August. In addition, "the economic crisis of different industrial countries will have a negative impact on oil demand," he said, referring to a "warning by the International Monetary Fund of another economic crisis to come soon". OPEC ministers are scheduled to hold their next meeting on December 14 in Vienna. OPEC's most recent meeting, on June 8, failed to reach agreement on production levels for the second half of this year. The previous output target of 24.845 million b/d, which covered 11 members but not quota-exempt Iraq, came into force in January 2009 when OPEC was trying to slash production in response to plunging oil prices and a deepening global recession. OPEC price doves, the Persian Gulf Arab states, have recently joined Iran's view that the worsening economic prospects in the West, specially in the US, require stabilized production at the present levels. On Saturday, Khatibi told FNA members of the cartel are narrowing down their differences over production ceiling, given the deteriorating economic conditions in the advanced countries. "We do not accept that a gap exists in the OPEC since different views have always existed in the OPEC," Khatibi told FNA Saturday, dismissing media reports on the widening of rifts among the OPEC members in their latest meeting. He said that during that meeting, certain members were optimistic about the future of the world economy and wanted a hike in the production ceiling due to a forecasted increase in demand, but a majority of others held an opposite view. "But Saudi and Kuwaiti oil ministers never said that they did not accept or would act in opposition to the OPEC decision," the Iranian governor reiterated. Khatibi further stated now that the prospects of the US and western economies have become a source of concern for all parties, "I don't imagine that any difference exists in the members' views about the global economy and all parties are coming to the conclusion that the world economy, specially the advanced countries, are faced with serious problems".