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    OPEC's Oil Production Quotas

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    Yash Bhayani
    OPEC sets oil production quotas to pursue stability in oil markets for both producers and consumers. If demand grows or some producers decrease output, OPEC can increase production to prevent sudden price rises. OPEC decided to keep quotas unchanged at 24.845 million barrels per day based on expectations that a recovering global economy will maintain prices near $80 per barrel. Compliance with quotas was estimated at 71% in August 2009. OPEC aims to influence oil prices through controlling around 46% of global crude oil production.

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    OPEC's Oil Production Quotas

    Uploaded by

    Yash Bhayani
    46 views7 pages
    OPEC sets oil production quotas to pursue stability in oil markets for both producers and consumers. If demand grows or some producers decrease output, OPEC can increase production to prevent sudden price rises. OPEC decided to keep quotas unchanged at 24.845 million barrels per day based on expectations that a recovering global economy will maintain prices near $80 per barrel. Compliance with quotas was estimated at 71% in August 2009. OPEC aims to influence oil prices through controlling around 46% of global crude oil production.

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    OPEC sets oil production quotas to pursue stability in oil markets for both producers and consumers. If demand grows or some producers decrease output, OPEC can increase production to prevent sudden price rises. OPEC decided to keep quotas unchanged at 24.845 million barrels per day based on expectations that a recovering global economy will maintain prices near $80 per barrel. Compliance with quotas was estimated at 71% in August 2009. OPEC aims to influence oil prices through controlling around 46% of global crude oil production.

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    46 views7 pages

    OPEC's Oil Production Quotas

    Uploaded by

    Yash Bhayani
    OPEC sets oil production quotas to pursue stability in oil markets for both producers and consumers. If demand grows or some producers decrease output, OPEC can increase production to prevent sudden price rises. OPEC decided to keep quotas unchanged at 24.845 million barrels per day based on expectations that a recovering global economy will maintain prices near $80 per barrel. Compliance with quotas was estimated at 71% in August 2009. OPEC aims to influence oil prices through controlling around 46% of global crude oil production.

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    OPEC’s oil production quotas

    • Why does OPEC set oil production quotas?


    – The OPEC Statute requires OPEC to pursue stability and harmony in the
    petroleum market for the benefit of both oil producers and consumers.
    – If demand grows, or some oil producers are producing less oil, OPEC can
    increase its oil production in order to prevent a sudden rise in prices.

    • OPEC said it will keep oil production quotas unchanged, banking on a


    recovery in the world economy to maintain prices near today’s US$80 a
    barrel.

    • The Organization of Petroleum Exporting Countries agreed to maintain


    total production quotas at 24.845 million barrels a day.

    • The 11 members bound by quotas pumped 26.055 million barrels a day in


    August 2009, according to estimates in a Bloomberg survey, which
    indicates quota compliance of about 71%.
    Cont…
    • Saudi Arabia, Kuwait and Qatar pumped less than their target last month,
    according to Bloomberg estimates.

    • Iran, Angola and Venezuela were the biggest quota busters.

    • Iraq is the only OPEC member which does not have production limits.

    • OPEC members will make $559 billion in net sales from crude exports this
    year.
    OPEC oil production affect oil
    price
    OPEC and Global Oil Supply and
    Demand
    • Oil prices are driven by global changes in supply and demand along with a
    number of other geopolitical factors.

    • Worldwide oil production is controlled by OPEC, which aims to keep a


    stable price-per-barrel for crude oil.

    • OPEC’s goal over the past decade has been to keep the price of oil around
    $30/barrel however major global events have made this task increasingly
    difficult over time.

    • The Oil and Energy Ministers of the OPEC Member Countries meet at least
    twice a year to co-ordinate their oil production policies in light of the
    market fundamentals, ie, the likely future balance between supply and
    demand.
    • As OPEC Countries produce about 46 % of the world's crude oil and about
    60 % of the crude oil traded internationally, any decisions to increase or
    reduce production may lower or raise the price of crude oil.

    • Previously in July 2008, Oil prices was all-time high of $147.27 a barrel, but
    fell to $32.40 in December same year as the world grappled with
    recessionary pressures, which eroded global oil demand.

    • Hence, the falling prices of crude oil not only affected investments in both
    the upstream and downstream, but would delay future investments.

    • OPEC’s Secretary-General, Mr.Abdalla El Badri said, if the present situation


    did not change, future investments can get cancelled, a development
    which would automatically affect oil supply to the market.
    • This will automatically affect oil supply to the market. It will also have an
    effect on gas supply.

    • The current price rally of $ 80 a barrel, OPEC said it is in a comfortable


    zone.

    • Thus, production has risen again, mainly because of higher volumes from
    Angola and Nigeria.

    • The survey noted that increases from Angola and Nigeria totaling 150,000
    b/d were offset by decreases from Ecuador, Iran , Iraq , Saudi Arabia, the
    United Arab Emirates (UAE) and Venezuela totaling 110,000 b/d.

    • The latest estimates leave the OPEC-11 overproducing their 24.845 million
    b/d output target by about 1.49 million b/d.

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