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OPEC agrees to keep 30 million b/d crude output ceiling


Staff reports in Vienna


December 5, 2013 -- OPEC ministers meeting in Vienna December 4 reached a widely expected agreement to keep their current crude output ceiling of 30 million b/d in place for the time being and to meet again on June 11, 2014, ministers said as they left the meeting.


"We will follow very closely the market for the next year, up to the first six months. With this decision we have guaranteed stabilization and a good price for everyone," said Venezuela's Rafael Ramirez.


"I believe the price will maintain a minimum of $100/barrel which is the consensus of everybody here," he said.


Iran's Bijan Zanganeh said ministers had agreed to meet again on June 11, 2014, and that the term of the organization's current secretary-general Abdalla el-Badri had been extended for another year, to run through 2014.


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Zanganeh said he expected oil prices to "remain over $100/barrel" as a result of the OPEC agreement.


OPEC said in a communique that despite global economic uncertainty and the likelihood that growth in world oil demand will be more than offset by a projected increase in non-OPEC supply, ministers had "in the interest of maintaining market equilibrium" decided to maintain the current ceiling.


"In taking this decision, member countries re-confirmed their readiness to swiftly respond to developments which could have an adverse impact on the maintenance of an orderly and balanced oil market," it said.


In its annual World Oil Outlook last month, OPEC said it expected US shale oil to account for half of a 4 million b/d cumulative increase in non-OPEC production over the period to 2018.


Among OPEC members, light-sweet crude producer Nigeria has been particularly affected by the increase in US production of shale oil and has seen its exports to the US plunge.


But the same is not true for other OPEC producers.


Saudi oil minister Ali Naimi earlier December 3 described shale as "a welcome addition to world reserves" and Iran's Zanganeh also appeared to be unfazed by the shale phenomenon that is dramatically reducing US reliance on imported crude.


"We have challenges and opportunities. Everybody is producing oil. We have new output. we have investment. Other investors on the other side of the world try to produce more, especially shale and tight oil," Zanganeh said.


"Today, based on our discussions, this is not a threat to OPEC," he said. "Based on the report we had today, production of shale will go up, but not as much as is exaggerated by some. When production rises rapidly, its sustainability will not last long."


Comfortable


Several ministers had indicated in advance of the talks that they were comfortable with current oil market fundamentals and that they did not expect any change in production.


In fact, OPEC output has recently been running below 30 million b/d following a scaling back of Saudi output and the near-anarchy that has distinguished Libya's oil sector since May.


Libya's current output is just 250,000 b/d, according to oil minister Abdel Bari al-Arousi, well below levels of around 1.4 million b/d achieved in the earlier part of this year. Libya had been pumping close to 1.6 million b/d before the start of the 2011 uprising against the regime of Moammar Qadhafi.


But next year could see Iranian crude exports increase substantially if a six-month interim agreement reached in Geneva last month results in a comprehensive agreement on the nuclear issue and a lifting of sanctions.


Iran's exports have fallen to an average of around 1 million b/d from pre-sanctions levels of 2.2-2.3 million b/d.


Speaking ahead of the meeting, Zanganeh said Iran was determined to regain its previous crude production level of 4 million b/d in the event of sanctions being lifted and expects fellow OPEC members to help accommodate its full return to the market.


"Under any condition I will produce 4 million b/d, even if the oil price goes to $20/barrel, I will not let go of Iran's right for that 4 million b/d," he said.


Later, he told reporters he had told ministers that Iran intended to restore output to the 4 million b/d level and had received their support.


"We received the welcome of the members at the highest level," he said.


Venezuela's Ramirez said OPEC could have to adjust output if sanctions are lifted.


"After the sanctions, when Iran can export all the volumes that they produce, then everybody will have to adjust the quota," he said.


"The most important thing is we are going to maintain the ceiling of production of 30 million b/d," he added.


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