The OPEC (Organization of the Petroleum Exporting Countries) decision to holds production is a good news for oil importing nations and consumers and industries. It will create a balance that likely will help push prices down. Enough to help sustain the world’s struggling economic recovery.
OPEC produces roughly a third of the world’s oil supply, so its output-policy decisions can sometimes roil world oil markets and create ripple effects into other asset classes. Oil prices remain in the $100 a barrel range, a high level that drew a renewed warning Wednesday from consumers that OPEC needs to keep pumping at current levels or boost output.
The Vienna-based organisation, which supplies a third of the world’s crude, has had an output target of 24.84 million barrels per day (mbpd) for three years.
The 12-member cartel may decide to trim its actual production, which stands above the agreed ceiling, as OPEC hawks Venezuela and Iran seek to keep oil prices high.
The International Energy Agency (IEA) said Tuesday that OPEC in fact produced 30.68 mbpd last month as the cartel’s kingpin Saudi Arabia pumped out extra crude despite Libya making progress towards returning to pre-war output.
The IEA’s OPEC output estimate includes crude supply from Iraq, which is not part of the cartel’s official production quota because of unrest in the country.
OPEC (Organization of the Petroleum Exporting Countries) member nations could fill their treasuries quickly if crude prices remained well above $100. That would be true in the short run. But high oil prices might help trigger a new recession.