OPEC is producing 1.5 million barrels per day (bpd) more than its official output limit and there is enough oil in the market even as global prices remained high, the head of the producers’ cartel said on Wednesday.
Asked by reporters if the cartel would raise its official production limit at a meeting in Beirut on June 3 as world oil prices climbed above 13-year highs, OPEC President Purnomo Yusgiantoro said:
“I am in communication with the OPEC Secretariat and (we are) still studying the development.
“We have to see what’s the reason behind (the high prices). We have a leakage at 1.5 million bpd above official quota. We assure the market that there is enough oil.”
World oil prices rallied to their highest level in more than 13 years on Tuesday as Middle East violence kindled concerns over supply security with U.S. fuel inventories already running low.
NYMEX June crude futures kept a strong tone on Wednesday at $38.84 a barrel, down 14 cents, after settling at $38.98 a day earlier, its highest since the run-up to the Gulf War in October 1990 after Iraq had seized Kuwait.
When asked why OPEC had not raised the official output ceiling to match that of actual production, Purnomo, who is also Indonesia’s oil minister, said:
“At the moment, with the leakage at 1.5 million bpd, that means we are already producing more than the quota. This is not a problem (for OPEC) because the price now continues to be high.”
Purnomo said that while OPEC had implemented an April 1 decision to cut its official limit by one million bpd to 23.5 million bpd, it had also continued a “leakage of 1.5 million bpd.”
A Reuters survey released on Tuesday found that OPEC production fell in April from March as Saudi Arabia and the United Arab Emirates cut back exports, going some way towards implementing a cartel agreement to reduce production.
The 10 members of OPEC with quotas pumped 25.75 million bpd, trimming production by 360,000 bpd from March, the survey of consultants, shippers, industry and OPEC sources showed.
Total output from the Organization of the Petroleum Exporting Countries for the month dropped 360,000 bpd to 28.06 million bpd, as Iraq failed to raise exports, the survey showed.
OPEC member Kuwait said this week that persistently high oil prices would encourage OPEC to keep pumping above official output limits, adding that there was a 3.0-3.5 million bpd overhang in production.
While the United Arab Emirates had hinted that OPEC might raise its official supply limits to cool off prices and replenish low stockpiles during the third quarter, Nigeria had said it was too soon to say what the cartel would decide at its June meeting.
OPEC’s reference crude oil price rose to $34.13 a barrel on Monday from Friday’s $33.99, and Purnomo said on Tuesday the cartel was studying whether to raise the target band of $22-$28 to better reflect the strong market.
Venezuela is said to want it raised to $24-$30 and Nigeria has suggested it should be lifted to $25-$32.
