OPEC's Gulf Arab members seen to seek quota compliance
By Omar Hasan, AFPKUWAIT CITY -- Arab oil producers in the Gulf will likely call for quota compliance at OPEC's meeting on Wednesday but will not press for output discipline as long as prices remain high, analysts said.
March 16, 2010, 10:15 am TWN
“Highly compliant Gulf producers will call for quota discipline, but it will not be a pressing issue at OPEC's next meeting since oil price is high, demand is rising and outlook is positive,” Kuwaiti oil analyst Mohammad al-Shatti told AFP.
“It starts to become a key issue if the oil price drops sharply,” he said.
A majority of officials and analysts have forecast that the Organization of Petroleum Exporting Countries (OPEC) will keep its output quota unchanged at the Vienna meeting, considering positive market sentiment.
But questions remain on OPEC overproduction.
The cartel's production hit a 14-month high in February at 29.15 million barrels per day (bpd), when output from Iraq, which is not bound by the quota system, exceeded 2.6 million bpd for the first time since the 2003 U.S.-led invasion.
Production of the 11 OPEC members bound by quotas reached 26.55 million bpd, 1.7 million bpd above the output quota of 24.845 million bpd adopted in December 2008.
According to Middle East Economic Survey (MEES), the majority of the overproduction came from outside OPEC's Arab member states in the Gulf — Saudi Arabia, the United Arab Emirates, Kuwait and Qatar.
Iran and Angola overproduced by 400,000 bpd each in February, while the four Gulf Arab states, whose official quota is 53 percent of the OPEC-11, exceeded their quotas by just 200,000 bpd, according to MEES figures.
Saudi SAMBA group, however, said in its latest report that production discipline will be critical to securing balance in the oil market during 2010.
It said that the oil price is supported by high levels of liquidity, low interest rates, a relatively weak dollar and investors' access to tankers for storage.
“Changes in any or all of these elements, particularly the strength of the dollar, could have an adverse impact on (oil) prices,” SAMBA said.