Opec is considering raising oil supply targets for the first time since 2007, a move that could weaken $100 oil prices that have dragged on global economic growth. The Organisation of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, may raise supply targets by as much as 1.5 million barrels per day (bpd) when ministers meet on June 8, two Gulf oil sources told Reuters on Thursday.
"There is a need for an increase to replace the loss from Libya," one delegate said. "Oil prices are too high. $100 oil is scaring people." The most likely outcome would be for a rise of 1 million bpd: "That would be calming for prices," the delegate said.
A rise of 1 million bpd in Opec's output target would result in only a small increase in actual oil supply from the group, the delegate said. Part of the rise would simply absorb above-target supply that some members were already pumping, the delegate added. The 11 members bound by Opec production targets - all except Iraq - pumped 26.23 million bpd in May, nearly 1.4 million bpd above their 24.84 million bpd target.
Top oil exporter Saudi Arabia boosted oil supply in February to plug the gap left by Libya, then reduced supply again in March, citing a lack of demand. Opec has taken no formal decision to supply more oil to compensate for Libya's supply disruption or to ease prices.
"If this is 1 million bpd on top of the targets from over two years ago, then it's meaningless. If it's 1 million bpd above current production levels, then it's exactly what the market needs," said David Wech, analyst at JBC Energy in Vienna. Raising formal output targets would force Opec to confront tough issues. Saudi Arabia holds most of the group's spare capacity so is likely produce most of any extra oil supply. Saudi energy minister Ali Al-Naimi said the country would lift production if there was demand for more crude.
Other members would also want a share of any rise in supply targets, even if they were already at full capacity. Opec members Iran, Libya and Venezuela could resist any rise in targets, industry publication Energy Intelligence reported on Wednesday, citing an Opec insider.
Iranian Opec governor Mohammad Ali Khatibi declined to comment on whether the group would agree to boost production, "We will discuss it in the next meeting," Khatibi said at a gas exporters group meeting in Cairo. "We should see all fundamentals ... all indicators." Algeria's energy minister said he did not expect Opec to raise output at its meeting in Vienna.
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