The Organization of Petroleum Exporting Countries (OPEC) meeting would likely end with a decision to increase crude production levels to reduce international concerns about the high price of oil.
Meanwhile, any effort by Saudi Arabia to push for an increase in OPEC's oil output is likely to face resistance from some members as they meet to review production levels, according to the Angolan oil minister, Bloomberg has reported.
Market expectations for the OPEC meeting seem to focus on a 1 million- to 1.5 million-barrel-a-day quota increase, which would legitimize some, but not all, of the group's current overage, Canadian Imperial Bank of Commerce analyst Katherine Spector said, according to Wall Street Journal.
With production already some 2.3 million barrels a day over existing quotas anyway, the gesture of formalizing additional output would be politically prudent in light of the International Energy Agency's strongly worded call for more supply, Spector said.
OPEC, which pumps 40 percent of the world’s crude, will raise its official ceiling on output for the first time since 2008, a Gulf delegate told Bloomberg yesterday.
U.S. crude for July delivery dropped as much as 80 cents to $98.43 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.32 at 6.14 am EST.
OPEC is likely to increase its target by as much as 1.5 million barrels a day, Michael Wittner, the head of oil-market research at Societe Generale SA in New York, told Bloomberg yesterday. Morgan Stanley also forecast an increase of 1.5 million barrels, starting this summer.
Iran, the group’s second-biggest producer, has historically taken a hard line on oil prices, and its OPEC Governor Mohammad Ali Khatibi said on June 6 that his country would argue against raising output. There is no need to increase production at this time, Khatibi said, according to the Xinhua news agency yesterday.
OPEC is meeting as the fighting in Libya has shut off most of the output from Africa’s third-largest producer. A rebellion against Libyan leader Muammar Qaddafi has cut shipments from the North African country by almost 90 percent, according to Bloomberg estimates.