The Organisation of Petroleum Exporting Countries (OPEC) is unlikely to update its obsolete individual oil output quotas when it meets tomorrow, OPEC delegates said, deferring the thorny subject to 2012 or later.
The group, according to Bloomberg News, last changed its group limit in December 2008, setting quotas for 11 members except Iraq to collectively pump no more than 24.84 million bpd as part of a record supply cut as recession hits demand and prices.
It never revised the agreement, even though from mid-2009 many members started to raise output as prices and demand recovered. When OPEC at its last meeting in June failed to reach a decision, officials said the 2008 target was no longer valid.
While OPEC delegates say ministers may discuss at next week’s meeting a new output ceiling closer to actual production including Iraq of around 30 million bpd – new individual quotas are unlikely to be part of any deal.
“I don’t think they’ll go for individual targets on this occasion,” said Bill Farren-Price, oil consultant at Petroleum Policy Intelligence.
“There’s an unwillingness from some producers like Algeria and Iran to acknowledge their production capacity has slipped since the last agreement was reached three years ago.”
Oil reserves and production capacity are among the factors OPEC, source of more than a third of the world’s oil and holder of 81 per cent of its proven crude reserves, has used to set quotas among its members in the past.
The lack of a realistic OPEC target has not mattered in 2011 because Saudi Arabia and others have boosted supply to plug the gap left by Libya. But if 2012 sees a sharp economic slowdown that prompts OPEC to lower output, the lack of a production target or quotas may be damaging for the group.