OPEC urged to follow Saudi in boosting oil output

SINGAPORE – The International Energy Agency (IEA) Tuesday called on members of the Organisation of Petroleum Exporting Countries (OPEC) oil cartel to keep up with key member Saudi Arabia’s above-quota crude production to aid global economic recovery.

Speaking in Singapore hours ahead of a crucial OPEC meeting in Vienna, IEA chief economist Fatih Birol said current oil prices pose “a major risk for the economic recovery worldwide”.

“Saudi is doing a great job and I would consider Saudi Arabia as the central banker of the oil markets, and the decision that they will bring more oil into the markets is definitely a good one,” Birol added.

“But I will like to see that this move of Saudi Arabia is followed by other key oil producers,” he said.

Birol, whose Paris-based agency was set up to ensure reliable, affordable and clean energy after the 1973-74 oil crisis, also called for more investment in future oil production capacity.

OPEC kingpin Saudi Arabia — together with Kuwait — has boosted crude production to compensate for the suspension of Libyan oil exports and avoid a surge in world prices after the North African country’s descent into civil war this year.

But some OPEC members — notably Iran which currently holds the rotating presidency of the cartel — are calling on them to fall back into line as Libyan oil flows back into the market after the October overthrow of Moamer Kadhafi.

However, Saudi oil minister Ali al-Naimi on Monday said he was happy with Riyadh’s current 9.45 million barrels per day (bpd) output level, significantly higher than its quota of 8.05 million bpd.

The issue will likely be brought up in OPEC’s meeting on Tuesday, where the cartel will decide whether to change its oil production levels in the face of heightened Iran tensions, higher Libyan output and a weak economy.

Analysts widely expect the cartel — which supplies a third of the world’s crude — to maintain its official output target of 24.84 million barrels per day, a level that has stood for almost three years.

OPEC currently supplies 30 million barrels to the market, including the output from Iraq which is exempt from quotas as the country struggles to rebuild after years of conflict.

Excluding Iraq, the cartel is pumping almost 10 percent above its aggregate quota limit.