OPEC May Lift Quotas
Monday, September 19, 2005
The Organization of Petroleum Exporting Countries may agree to offer customers every barrel of oil that members can produce, effectively suspending the group's quota system.
OPEC has 2 million barrels of production capacity idle, Sheikh Ahmad Fahd Sabah, the OPEC president and Kuwaiti oil minister, said in Vienna, where OPEC meets today. One proposal is for members to offer that full amount to buyers, he said. The other is for an increase in the quota of 500,000 barrels a day, or 1.8 percent.
"We can offer the 2 million barrels of extra capacity to the market, available for whoever wants to have it," Sheikh Ahmad said. He said that that could be better than the quota increase and that both ideas are under consideration.
Saudi Arabia's oil minister, Ali Nuaimi, said Saturday that he supports a higher production quota, a position followed yesterday by his counterparts from Nigeria, Algeria and Qatar.
The oil ministers for the United Arab Emirates, Mohamed bin Dhaen Hamli, and Venezuela, Rafael Ramirez, said such a decision may not lead to lower gasoline prices because of bottlenecks in the refining system.
OPEC today will start its two-day meeting to deliberate an increase in the official output ceiling, now at 28 million barrels a day for the members outside of Iraq. Those members produced 28.55 million barrels a day last month.
"The market is very well supplied," the United Arab Emirates' Hamli said. "If the quota goes up, then what difference would that make? We already produce 500,000 barrels a day above the quota."
Saudi Arabia's Nuaimi said his country already has offered to produce at 11 million barrels a day, its full capacity. The nation is pumping at about 9.5 million barrels a day now.
"We have had no response whatsoever" to the offer of 11 million barrels a day, Nuaimi said.
Venezuela's Ramirez said an OPEC decision for higher quotas may not lead to lower prices at the pump.
"It won't make a difference," he said in Vienna.