What Does Organization of Petroleum Exporting Countries - OPEC Mean?
An organization consisting of the world's major oil-exporting nations, OPEC was founded in 1960 to coordinate the petroleum policies of its members and to provide member states with technical and economic aid. OPEC is a cartel that aims to manage the supply of oil in an effort to set the price of oil on the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
Any effort by Saudi Arabia to push for an increase in OPEC’s oil output is likely to face resistance from some members as they meet to review production levels, according to the Angolan oil minister.
Ecuador, Venezuela and Angola itself said oil markets are well supplied and that they see no reason to raise production. The group’s 12 members began meeting today in Vienna at 10:30 a.m. local time.
“People are talking about an increase,” Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters yesterday in the Austrian capital. “We have to wait and see. My feeling is there is no need. The market is supplied at this time. There are some geopolitical problems.”
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s crude, will raise its official ceiling on output for the first time since 2008, a Gulf delegate with knowledge of the matter said yesterday, declining to be identified because he isn’t authorized to speak publicly. OPEC ministers are meeting amid speculation that Saudi Arabia, the group’s largest producer, wants to add as much as 1.5 million barrels a day to global supply to help replace lost Libyan supplies and meet growth in demand later this year.
U.S. crude for July delivery dropped as much as 80 cents to $98.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.31 at 8:34 a.m. in London. Prices have gained 37 percent over the past 12 months.
Analysts Foresee Increase
Michael Wittner, the head of oil-market research at Societe Generale SA in New York, said yesterday that OPEC is likely to increase its target by as much as 1.5 million barrels a day. Morgan Stanley also forecast an increase of 1.5 million barrels, starting this summer.
Venezuela’s President Hugo Chavez said he sees no need for a production increase for now. Chavez, speaking on state television during a visit to Ecuador, said prices are reaching a fair level and will keep rising in the next few years.
Ecuador’s President Rafael Correa agrees. Correa, speaking yesterday in the Ecuadorean coastal city of Salinas, said $100 a barrel is a “just” price for oil, according to comments broadcast on Venezuelan state television.
Iran, the group’s second-biggest producer, has historically taken a hard line on oil prices, and its OPEC Governor Mohammad Ali Khatibi said on June 6 that his country would argue against raising output. “There is no need to increase production” at this time, Khatibi said, according to the Xinhua news agency yesterday.
Libyan Crude Missed
OPEC is meeting as fighting in Libya shuts off most of the output from Africa’s third-largest producer. A rebellion against Libyan leader Muammar Qaddafi has cut shipments from the North African country by almost 90 percent, according to Bloomberg estimates.
The group announced its biggest-ever supply cuts in December 2008 amid a collapse in demand, capping production at 24.845 million barrels a day for all members except Iraq, which is exempt from the quota system. OPEC’s compliance rate with those limits was 69 percent in April, it said in its most recent monthly report on May 12.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Read More