OPEC ready to cut oil production in 2013 amid oil prices drop

On Dec 14, 2012

The Organization of Petroleum Exporting Countries (OPEC) announced this week that it will keep its oil output limit at 30 million barrels per day, with production running about 1 million barrels a day above the level of supply that OPEC expects the world will need from it next year. This decision was taken in reaction to higher output from the major consumer United States and a decrease of energy demand which will cause a fall of prices as predicted by some analysts.
At a ministerial meeting on Wednesday in Vienna, where OPEC is based, the 12 member countries, after failing to agree on a new head of the organization, re-elected Abdullah El-Badri for another year. El-Badri stated in an interview that the current price of 110 dollars per a barrel of Brent crude is adequate for both producers and consumers, with the biggest challenge that global oil markets will face insecurity which dominates the global economy and the euro zone.
While analysts said that OPEC may cut production already in the coming months, its members stated that they must be very careful not to cut too much the production, in order to not increase prices of oil too much, damaging the economic recovery.
Recently Iran has asked OPEC to cut its output, as it is likely to face a decrease of oil demand of about 1 million barrels per day because of the sanctions, in order not to allow countries to find other sources of oil.
OPEC foresees that global demand will reach 90.83 mbd by the end of 2013, with main increase that is likely to come from North America. The IEA forecasted that the US could turn into the world’s biggest oil producer by 2017, due to the shale boom.