Eurasia Press & News
TEHRAN (FNA)- OPEC members may exert pressure on Saudi Arabia at the upcoming meeting of the world oil cartel in Vienna to cutback its production amid falling energy prices.
Despite the OPEC decision to maintain crude output levels, under US pressure member-state Saudi Arabia raised crude production to 9.7 million barrels per day (bpd) in July, following an oil summit of consumers and producers hosted by the Kingdom in June.
This was Saudi Arabia’s highest output level since 1981, and significantly higher than the informal Saudi OPEC target of 8.94 million bpd.
The Organization of the Petroleum Exporting Countries (OPEC) is pumping almost one million bpd more than its target level of 29.67 million bpd, according to Petrologistics, a consultant company which tracks OPEC supply. Some members of the cartel have voiced concerns about the oversupply of oil in the market.
While oil prices were on the rise, OPEC ceilings and quotas became largely irrelevant. OPEC had a “tacit” understanding that those members capable of boosting crude production should supply as much oil as world oil markets needed.
With the increase in OPEC oil production, particularly by Saudi Arabia, and the decline in world demand, oil prices have dropped from the record high of $147.27 per barrel on July 11 to the current price of $117.17 per barrel on the New York Mercantile Exchange.
“I think there will be pressure on Saudi Arabia to rein in some of its recent unilateral increases,” said Julian Lee, analyst at the London-based Centre for Global Energy Studies.
“It all depends on what level of prices Saudi Arabia wants to see.”
OPEC ministers are scheduled to meet in Vienna on Sep. 9 to review the organizations output policy. The group is also expected to hold an extraordinary meeting in Algeria in December.
OPEC members say that the market is well-supplied and that factors beyond their control, such as speculation, a weakening US dollar, inadequate refining capacity and geopolitical tensions were behind the drive in crude oil prices in the past few months.
Iranian officials blame sanctions that have been imposed against Tehran as a major contributory factor to the last year rise in prices.
Analysts view US-led sanctions against Iran and geopolitical factors as among the main causes of recent hike in oil prices, saying that fears of a new Middle East conflict are behind the new high for oil prices.
Market analysts, specially those from consumer nations, take Bush administration responsible for the price hikes during the last year, saying that these are frequent sanctions and the “rumors of US and Israeli action against Iran circulating in the markets” that affected oil and the dollar.
Prices dropped by around 20 dollars last month after West softened rhetoric in the dispute with Iran.
