The Organisation of Petroleum Exporting Countries (OPEC) is trying to `fine tune' the world oil markets by preserving a good balance between supply and demand. Moin A Siddiqi reports.
The 10 OPEC members (excluding sanctions-bound Iraq) have reduced their collective oil production by 2.5 million barrels a day (b/d), or 9.3 per cent, in the first quarter, in order to underpin prices amid seasonal weakening in energy demand and a global economic slowdown. The cartel controls about 40 per cent of the world's oil production (exceeding 77 million b/d) and supplies two-thirds of the globe's crude exports. More importantly, about 80 per cent of proven oil reserves world wide (1,033.8 billion barrels) are deposited in OPEC countries, the bulk of which are in the Middle East.
During April-June, oil consumption in the northern hemisphere usually drops by between 2-2.5 million b/d. The new ceiling for OPEC members, effective from 1 April for OPEC-10 is 24.2 million b/d, a decline of 4.3 per cent over the February-March production level. Bijan Namdar Zangeneh, the Iranian oil minister, defended OPEC's supply restraints by saying: "We believe it is necessary to do something because there is a huge amount of over-production in the market." OPEC hawks, including Venezuela, Kuwait, Libya, and Algeria, had anticipated a supply-surplus of 2.6 million b/d without the cuts implemented in February and April.
OPEC's total production (including Iraq) in March …