OPEC may keep output target unchanged

26 May 2009

The Organisation of the Petroleum Exporting Countries (OPEC) members are scheduled to attend an extraordinary meeting in Vienna tomorow to reevaluate their oil supply policies in the light of the recent ''glimmers of hope'' in the global economy amidst continuing recession.

It is widely believed that the recent surge in oil prices to above $60 a barrel, which is almost double the December low of $32.40 and a near six-month high, has alleviated some of the concerns of the OPEC members about the growing oil inventories. The group is expected to stick to its present output target of 24.845 million barrels per day (bpd).

OPEC, which supplies around 40 per cent of oil to the world, had pledged an output cut of 4.2 million bpd or around five per cent of global supply, since last September, to counter the sharpest demand slump in almost three decades as a result of the global economic meltdown. In their previous meeting in March, when the oil prices were trading below $50 a barrel, the OPEC ministers decided in favour of stricter compliance to the existing cuts rather than introducing new production curbs.

Saudi Arabian oil minister Ali al-Naimi said his country is ''absolutely fine'' with the compliance to the group's production cut targets.

The compliance has slipped below the 80 per cent mark, to 77 per cent as indicated in the latest monthly report of OPEC.

Analysts believe that, in the present scenario, an output curb is less likely which would invite widespread criticism from oil consumers, as the global downturn is still continuing. Moreover, International Energy Agency (IEA) forecast a demand drop of 2.56 million bpd in 2009 compared to last year.