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OPEC Secretary-General Abdullah al-Badri said the 12-member cartel could make room for an increase in oil from Iran, Iraq and Libya. All three member states could be on the verge of a revival and the OPEC boss says accommodations could be made when they return. Emerging trends, however, suggest his anticipation may be premature.
OPEC set a production target for its members of 30 million barrels of oil per day, but doesn't have individual quotas in place. Saudi Arabia and OPEC's top producers have been making up for shortages from Iran, Iraq and Libya, but now the secretary-general said it may be time to make accommodations.
"When they come, we will accommodate them, and OPEC will be as before," he said following his speech at Chatham House, the London think tank.
The Organization of Petroleum Exporting Countries in its January market report said Iranian crude oil remains off limits for most European refiners because of sanctions pressure. Iran in January managed to increase crude oil exports modestly after implementing the terms of multilateral nuclear deals. Shippers, however, said they're confused by the wording of regulations that would lift the ban on insurance for vessels carrying Iranian crude.
For Iraqi oil, supplies were hampered by what OPEC described as "pipeline issues." At the same event at Chatham House, Hussain al-Shahristani, Iraq's deputy prime minister in charge of energy affairs, said oil from the Kurdish north should be exported through Iraq's State Oil Marketing Organization as outlined in the national constitution. There was no word on the proposal this week from the Kurdish government, which is making preparations to export crude oil on its own through Turkey. National security challenges in Iraq, meanwhile, are complicating developments ahead of April elections.
Libyan oil production has rebounded slightly since OPEC reported December crude oil production averaged 256,000 barrels per day. That's a far cry from its post-war peak of 1.39 million in 2012, however. Abb-Rabbo al-Barassi, leader of the self-proclaimed Cyrenaica government in oil-rich eastern Libya, denied suggestions the end of a standoff with Tripoli was imminent, saying the federal government hasn't yet met the terms needed to reopen eastern Libyan oil terminals. Libya too remains fractured by war. On Wednesday, a vehicle carrying Libyan Interior Minister Al-Sadik Abdel-Karim was riddled with bullets, though he survived the assassination attempt in Tripoli.
OPEC's report for January states Iranian crude oil production declined 9.4 percent from 2012 to average 2.69 million bpd last year. For Libya, production last year was down 33 percent from 2012 to average just 931,000 bpd. Iraq was the only one of the three to report gains, with a modest 1.74 percent increase from 2012 for an average 3 million bpd last year. Iraq, however, is struggling to contain al-Qaida and internal issues may complicate further developments.
The OPEC secretary-general said the industry needs to pay close attention to market dynamics in order to get its policies right. In terms of price, he said there are no guarantees on what happens in the future. For producers, the situation is no different. Nevertheless, he told delegates the three words that sum up his agenda were "stability, stability and stability." A short-term bet on troubled OPEC members, however, is anything but that.