OPEC set to maintain oil output ceiling

Updated 28 December 2013

OPEC set to maintain oil output ceiling

VIENNA: OPEC was expected to stick by its oil output limit at a meeting here even as Iraq and Iran eye higher crude exports amid slashed Libyan production.
The Organization of Petroleum Exporting Countries does not see a need to alter the cartel’s crude production ceiling of 30 million barrels per day, member nations led by the world’s biggest oil producer Saudi Arabia said in Vienna ahead of the meeting.
Pumping about one third of the world’s crude, OPEC will decide also on whether to replace Abdullah El-Badri as secretary general.
“We know demand is good, economic growth is good, supply is good,” Saudi Oil Minister Ali Al-Naimi told reporters at OPEC headquarters in the Austrian capital.
OPEC members Nigeria and Venezuela each said they believed the cartel would agree to maintain its crude oil production ceiling.
Oil market analysts were meanwhile not expecting any surprises from OPEC, whose dozen member nations from the Middle East, Africa and Latin America are together producing slightly below its output target.
“It is unlikely that OPEC will adjust its official notional production ceiling as it is unlikely that either Iran and Iraq can contribute incrementally in any significant manner to the group’s supply next year,” Harry Tchilinguirian, BNP Paribas’ global head of commodity markets strategy, told AFP.
OPEC is facing also demand strains as consumers turn to cheaper oil and gas extracted from shale rock, particularly in North America.
At the same time, Iraq and Iran are seeking to increase their production after sizable falls to output in recent years.
Saudi Arabia and other OPEC members argue that benchmark crude oil prices, currently averaging $100 per barrel, provide acceptable income for producers without weighing too heavily on consumers.
“The price of oil is acceptable and there will be some additional oil coming to the market from OPEC and outside OPEC,” Qatar’s Energy Minister Mohammed Al-Sada said.
“What is more important is that this additional oil will be needed for the signs of economic recovery.”
Al-Sada added: “The current (output) situation seems to be comfortable... 30 million barrels seems to do justice to the current economic situation.”
Iran’s Oil Minister Bijan Zanganeh this week said that the country would be able to “immediately” export 4.0 million barrels per day (bpd) once sanctions are lifted in the wake of the international deal to roll back its nuclear program.
Iranian crude oil exports have been slashed to about 1.2 million bpd from 2.5 million bpd in 2011, according to Zanganeh.
At the same time, Iraq’s Oil Minister Abdelkarim Al-Luaybi said his country hoped to export 3.4 million bpd of crude oil next year, including 400,000 bpd from Iraqi Kurdistan, as it looks to recover from years of bloodshed.
This compares with exports of 2.38 million bpd in November.
The market though doubts how quickly new production can come on board.
“OPEC will find it very hard to come to an agreement to cut production given a significant number of its members — Iran, Iraq, Libya, Nigeria — are suffering from constrained production,” said Thomas Pugh, commodities analyst at Capital Economics consultants.
Libya’s output has plunged to about 250,000 bpd amid deadly fighting between radical fighters and the army, but oil minister Abdelbari Al-Arusi said he hoped production would be back to its normal level of 1.5 million bpd within two weeks.
Nigeria is meanwhile facing regular acts of sabotage to its oil pipelines.
Saudi Arabia is battling against Iraq and Iran for the position of succeeding El-Badri, who has steered the cartel through the financial crisis in the role of administrative head since 2007.
OPEC voted in December last year to re-appoint the Libyan for another year after members failed to agree on a new secretary general.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.