OPEC to begin campaign against output cheating
The Organization of Petroleum Exporting Countries (OPEC) may issue a new regulation for the deceleration of output production at their next meeting this Thursday.
Overproduction by the group’s members rose to 2.78-million barrels per day (bpd) in October, creating likelihood for a significant oil price drop.
Industry sources forecast that Saudi Arabia will suggest an alternative of elevating OPEC’s targeted output, bringing it in line with current production levels, reported AP. The two options would manage to keep crude prices from falling under $22 per barrel.
OPEC members will work on ways of cutting one million bpd from its current daily production this week in Vienna. The Saudi initiative would boost quotas by 1.5 million barrels a day while simultaneously cutting one million bpd from daily output, eliminating 2.5 million barrels a day in overproduction.
OPEC ministers on September 19 decided to maintain output quotas at the time under a 21.7-million bpd ceiling, despite some having acknowledged that cheating was in the order of two-million bpd, and agreed to meet again on December 12.
Much of their reluctance to legitimize the overproduction was based on their belief that several dollars of current price levels are attributable to fears that a US strike against Iraq could disrupt Middle East oil supplies. — (menareport.com)
© 2002 Mena Report (www.menareport.com)