OPEC keeps production ceiling unchanged, plans July review
DOHA, Qatar -- OPEC producers agreed Wednesday to maintain their current production levels through the end of next month, when they plan to meet again to assess the impact of rising Iraqi oil exports and whether to change output targets.
The possibility that the Organization of Petroleum Exporting Countries could cut production levels at its next meeting on July 31 helped push oil prices above $32 a barrel in New York for the first time since mid-March.
Even as it decided to maintain its target production ceiling at 25.4 million barrels a day, OPEC urged member states to stop exceeding their production quotas.
Attracted by high prices, the 10 OPEC nations, excluding Iraq, have exceeded their designated quotas by 1.5 million barrels a day, according to Obaid bin Saif al-Nasseri, oil minister of the United Arab Emirates.
That means the group is actually pumping 26.9 million barrels onto the market every day.
Cartel president Abdullah bin Hamad al-Attiyah, who is also Qatar's oil minister, said OPEC would reassess the impact of Iraq's postwar return to the market at the July 31 meeting.
"Then we will have some options -- either to cut production or not. That is what we need to decide," al-Attiyah said.
Some ministers are worried that early action must be taken to avoid a price crash once Iraq re-enters the market, and others are confident that OPEC's current production can continue unchanged for several months. The decision appeared an accommodation of sorts.
"The conference decided to maintain currently agreed production levels with stricter compliance of designated quotas," OPEC spokesman Omar Farouk Ibrahim told reporters.
If OPEC members comply with the quotas, some analysts say U.S. consumers may have to pay more per gallon as demand increases during the summer.
Iraq, which was excluded from OPEC's quota schedule during the 12 years of U.N. sanctions, says it hopes to export 1 million barrels a day by the end of June and 2 million barrels a day by the end of the year.
Analysts say that is too optimistic given the state of Iraq's oil industry, which suffered war damage, postwar looting and a chronic shortage of spare parts during the sanctions period. Before the war began in March, Iraq pumped about 2.1 million barrels a day.
"The pace and the extent of the return of Iraqi crude to the market remain unclear," OPEC chief al-Attiyah said in his opening speech to Wednesday's meeting, at which Iraq was not represented.
Talking to reporters before the decision to roll over output, al-Attiyah warned that OPEC must act in time to accommodate Iraq.
"We should not wait until the crisis comes," he said. "Iraq will come to the market, that's their right. We have to help them and we also have to make room for them."