Nov 21 2012
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Pressure Mounts Within OPEC to Comply With Ceiling
Wednesday, Nov 21, 2012
By Summer Said and Benoit Faucon
RIYADH--Voices urging the Organization of Petroleum Exporting Countries to comply with its production ceiling are growing louder within the group as price fears mount, with some delegates from both sides of the Persian Gulf concurring OPEC should act against oversupply.
In a rare display of agreement, three OPEC delegates--from Iran and Gulf Arab countries--said the group should deal with excess amounts of oil in the market when it meets next month.
"OPEC is producing at least 500,000 barrels a day more than needed so it would actually need to respect its ceiling, not increase it," one delegate from the region said.
OPEC agreed in June to maintain its existing oil-production ceiling of 30 million barrels a day and pledged to rein in overproduction.
In October, the group produced 30.946 million barrels a day, according to secondary sources quoted by its monthly report. That is 946,000 barrels higher that its ceiling and 447,000 barrels more a day than demand for its crude in the fourth quarter.
And despite OPEC's prediction that markets will need 400,000-barrels-a-day less of its crude next year, it has boosted shipments by 700,000 barrels a day in the four weeks to Dec. 1, according to U.K. consultancy Oil Movements.
But not all Gulf members agree the group is under pressure.
OPEC kingpin Saudi Arabia said last week that oil markets were well balanced and inventory levels are comfortable.
"The market really is in a good shape. We are very happy with the situation in the market," the kingdom's oil minister, Ali al-Naimi, told reporters in Abu Dhabi.
But another delegate in the Persian Gulf warned that, though "currently everybody is happy with where the current price is, but the risk is on the downward side."
Another topic that will feature highly on the agenda will be the designation of a new OPEC chief. When asked about whether the group will decide on a successor to OPEC's outgoing secretary general, Abdalla el-Badri, Mr. Naimi said he was hopeful the group will select the kingdom's nominee, Majid al-Moneef, who used to be the kingdom's OPEC governor.
The Saudi nomination was followed by one from Iraq, which proposed Thamir Ghadhban, energy adviser to Iraq's prime minister, and Iran's nomination of its former oil minister, Gholam Hossein Nozari. Ecuador also put a candidate forward to replace Libya's Badri, who is scheduled to leave at the end of the year after a six-year tenure.
An OPEC panel in October failed to agree on a preferred candidate to head the organization, highlighting the challenges facing the increasingly fractious OPEC, whose members produce more than a third of the world's oil supply.
The organization often has struggled to agree on a choice for secretary general, who plays a central role in brokering deals on oil policies and publicly articulating them.
But mounting tensions have further divided OPEC. A meeting last year broke down acrimoniously when members failed to agree on how much oil the group should produce.
Since then, OPEC members have continued squabbling. Iran and other members in June blamed excess Saudi production for a drop in oil prices, delegates said.
Write to Summer Said at email@example.com and Benoit Faucon at firstname.lastname@example.org
(END) Dow Jones Newswires
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