OPEC keeps oil output targets on hold- Business News

OPEC keeps oil output targets on hold

 Associated Press   Vienna     Last Updated: December 12, 2012  | 23:29 IST

Opec ministers agreed to keep their daily crude production target unchanged at a meeting on Wednesday. But in a sign of internal rivalries, they failed to reach consensus on a new secretary general, a post sought by Saudi Arabia, Iran and resurgent oil-power Iraq.

The agreement to leave the production ceiling at 30 million barrels a day was expected. Actual output, however, is a million barrels higher because some countries produce above their limits.

The 12-nation Organization of the Petroleum Producing Countries is expected to continue breaching the ceiling, despite a plentiful world supply of oil. Robust U.S. production and anemic world demand due to flagging economic growth have added to the mix, resulting in unusually high crude inventories.

OPEC predicts even less demand for its oil next year in part because of consuming countries' weak economies - a concern the organization addressed in a post-meeting statement as the "biggest challenge facing global oil markets in 2013."

Yet prices remain relatively high. The average cost of the group's oil basket - a mix of grades produced by OPEC countries - has been above $100 a barrel for the last two years, a first in OPEC's history. Brent crude, which is used to price international varieties of oil, has also been well over $100 a barrel for this year and was trading at $109.63 on Wednesday, up $1.62 on the day.

Such levels cover production costs for most OPEC countries with room for profits, leaving OPEC ministers comfortable with the present output arrangement.

OPEC announced its decision to leave the output ceiling unchanged in a statement.

There was no agreement, however, on replacing Libya's Abdullah Al-Badry as OPEC secretary general - the public face of the organization between ministerial meetings and a symbol of the cohesion the group likes to project despite persistent internal rivalries.

Instead, the meeting extended him for a sixth year, making him one of the longest-serving officials in that post in OPEC's history.

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