OPEC may keep crude oil production quotas unchanged

17:12, October 14, 2010      

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Energy and oil ministers of the Organization of Petroleum Exporting Countries (OPEC) may decide to keep the cartel's production quotas unchanged as they gather here on Thursday.

Reduction of crude oil production is unlikely as the world's major oil consumers are facing economic difficulties, analysts say.

Since last October, OPEC's weekly average oil price has been around 70 to 80 U.S. dollars. Many OPEC member countries have expressed satisfactions about the current international oil prices.

The global economy is showing no signs of quick recovery, especially in the United States, the world's largest oil consumer. The U.S. economy returned to the territory of negative growth in the second half of this year with poor figures for consumption, real estate, manufacturing, trade, employment. The Federal Reserve has lowered its economic growth expectation for 2010.

Furthermore, other major oil consumers around the world, such as Western Europe and Japan, also were characterized with fragile economic recovery.

But as the global economy was picking up, the prospect of crude oil demand is getting optimistic. In its latest monthly report, OPEC raised its expectation for global oil demand in this year and next year.

In addition, rapid growth of some newly industrialized countries is promoting crude oil demand.

At the same time, weak economic growth in the United States and Europe has led to a new round of accommodative monetary policies, which brought pressure to the U.S. dollar exchange rate. As crude oil is basically priced in the U.S. dollar, a weak dollar will push up oil prices.

Some analysts believe that in view of the current global economic situation, rapidly rising international crude oil prices will not only harm world economic recovery but also long-term interests of oil producers including OPEC member countries.

In recent days, Kuwaiti Oil Minister Ahmad Abdullah Al-Jaber Al-Ahmad Al-Sabah, Venezuelan Energy and Oil Minister Rafael D Ramirez and other senior officials of OPEC member countries have also expressed satisfaction with the current oil prices and called for OPEC to maintain the current oil production level.

With the global financial crisis, international oil prices nosedived in the second half of 2008. In order to prop up crude oil prices, OPEC announced three production cuts.

The production cuts amounted to a total cut of 4.2 million barrels per month, which reduced the cartel's production quotas down to 2,484 barrel per day. Thereafter, OPEC has kept its oil production quotas unchanged.



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