OPEC’s New Quota Meant to Rationalize Over-Production
Member-nations of the Organization of Petroleum Exporting Countries (OPEC) have agreed to raise its oil yield quota to 30 million barrels a day (mbpd), which is actually what the cartel has almost been producing lately.
The changed quota was the first in three years. But analysts saw it as a strategic move to justify its over-production.
"What they did was to ratify their over-production. They legitimized it," John Hall, an independent oil analyst, told AFP following OPEC's meeting in Vienna on Wednesday.
OPEC's members together pump one third of the world's oil supply. The oil group decided to maintain current oil production of 30 mbpd, based on an uncertain outlook for world energy demand.
And while a deal was set to govern overall group output cap, no details were mentioned as to production limits of individual member-countries.
On Tuesday, the International Energy Agency (IEA), which represents consumers, said OPEC had produced 30.68 mbpd in November, with Saudi Arabia and Kuwait contributing extra crude despite Libya working overtime to bring back pre-war output levels.
OPEC had been producing beyond its official output quota of 24.84 mbpd because members want to take advantage of the high oil prices. It does not put into tally output from Iraq due its continuing unrest.
Excluding Iraq, IEA estimated the cartel's other 11 member nations together pumped 27.97 mbpd of oil in November, still above OPEC's official quota.
OPEC will need to produce 30.1 mbpd next year to support world supply and demand, its secretariat said in a monthly forecast on Wednesday. World oil demand is seen to grow 1.1 mbpd, or 1.2 per cent, in 2012.
Meanwhile, OPEC, also on Wednesday, had chosen Iraq to be its president in 2012, taking over from Iran as cartel head.
The 12 members of OPEC are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.