OPEC insists it lacks capacity to raise supply quotas

Production levels leave little room to cope with output disruptions

The Daily Star Lebanon | Daily Star Staff

Beirut

OPEC does not have the oil production capacity to enable it to lift supply quotas at next week’s meeting in Iran, Algeria’s energy minister, Chakib Khelil, said on Thursday.

The Organization of Petroleum Exporting Countries meets on March 16 in Iran. Oil prices have risen 25 percent since the start of the year, setting near-record highs on forecasts of tight global supply through this year.

“I think that even an increase of a million barrels a day would not reduce prices,” Khelil said.
OPEC last year raised supply to the highest level in 25 years, leaving little spare production capacity to cope with output disruptions.

“Demand in China and strong global economic growth are the origin of the rise in prices … speculators are profiting from this,” Khelil said.

The group agreed to cut a million barrels per day of excess supply from January 1, but strong global demand allowed it to pump around 630,000 barrels per day above its official targets last month.

OPEC ministers from Iran, Qatar, Venezuela and Indonesia have come out in favor of keeping production steady at the March 16 meeting.

The cartel is reluctant to pump more crude going into the second quarter because demand falls off as the northern hemisphere winter draws to a close.

Saudi Arabia, the world’s biggest oil exporter, this week informed its customers that it would be supplying the same volume of crude in April as it shipped in March.

Meanwhile, the National Iranian Oil Company hiked free-on-board prices to Kharg Island in the Gulf for both Iranian Light and Iranian Heavy by $1.75, crude lifters in the Mediterranean said.

The Kharg Island price for Iranian heavy was raised to minus $7.40 against the IPE Brent crude weighted average and for Iranian Light it was set at minus $5.40, compared with March prices of minus $9.15 and minus $7.15 respectively.

Traders said the price hike, which follows a rise in Saudi Arabian prices earlier this week, was excessive. “It’s a crazy price,” one trader said. “Saudi Arabian prices were considered outrageous and they increased by $1.50. This is $1.75. ” – Reuters

The Daily Star – Lebanon