4th December, 2013
OPEC agreed on Wednesday to hold its crude production ceiling at 30 million barrels per day despite oversupply concerns and competition from cheaper shale oil.
The Organization of Petroleum Exporting Countries, which pumps out about one third of the world’s oil, failed again to decide on a new secretary-general amid group tensions, instead keeping Libya’s Abdullah El-Badri as its administrative head for 2014.
And Libya, where output of crude oil has fallen sharply on unrest in the country, will assume the cartel’s rotating presidency for next year, OPEC added in a communique.
The decision to maintain the oil ceiling had been widely expected by markets.
The cartel, which could see higher production from its members Iran, Iraq and Libya in coming months, nevertheless faces competition from non-OPEC producers of shale oil.
The International Energy Agency has said repeatedly that the shale energy boom is changing the landscape of global energy markets.
“We don’t say we are not concerned” by shale, El-Badri told a press conference on Wednesday — but insisted that OPEC could accommodate US shale output, currently at 2.7 million barrels per day and set to rise further.
OPEC said in its statement that “global economic uncertainty, with the fragility of the eurozone remaining a concern” was the biggest challenge facing world oil markets in 2014.
It said that “although world oil demand is forecast to increase during 2014, this will be more than offset by the projected increase in non-OPEC supply” amid a boom in oil and gas being extracted from North American shale rock.
OPEC added: “Nevertheless, in the interest of maintaining market equilibrium, the conference decided to maintain the current production level of 30 million barrels a day.”
Ahead of the meeting, member nations led by the world’s biggest oil producer Saudi Arabia insisted that there was no need to change the ceiling.
“We know demand is good, economic growth is good, supply is good,” Saudi Oil Minister Ali al-Naimi told reporters at OPEC headquarters in the Austrian capital.
The group, with a dozen member nations from the Middle East, Africa and Latin America, is producing slightly below its output target.
But production could increase in the coming months as Iraq and Iran look to export more crude after sizeable falls in recent years. Libyan supplies may also recover.