OPEC members are complying with a production accord designed to lift crude oil prices, a top official said Monday.
“OPEC has more or less found its form right now,” said Subroto, secretary-general of the Organization of Petroleum Exporting Countries. Subroto said crude oil prices would definitely reach the cartel’s target of $18 a barrel in the second half of this year.
That price will be reached “sooner rather than later” if members hold to their OPEC-set production quotas and if independent exporting nations reduce their output, he said.
The average price of a basket of crudes monitored by OPEC was $16.02 a barrel on Monday, up $4 to $5 from late November, when the cartel’s oil ministers struck a deal to curb production.
The accord set an overall ceiling, or quota, of 18.5 million barrels a day for the 13 member nations in the first six months of this year.
According to figures released Monday by OPEC, 12 of the countries supplied a total of 17.42 million barrels a day in January, slightly less than the quota of 17.51 million barrels set for them.
The cartel said in a news release that figures from the United Arab Emirates had not yet been received. The UAE, however, has persistently exceeded its target in the past, according to private analysts. Its current quota is 988,000 barrels a day.
Subroto, Indonesia’s former oil minister, said the supply figures provide “a sign that we are abiding (by) our quota.”
Private analysts estimated that OPEC surpassed its ceiling in January by about a million barrels a day.
OPEC, however, said it measures the quota by adding crude production and the amount of oil put into, or taken out of, stock. Production, which it defines as the amount of crude measured at storage facilities, was 18.13 million barrels a day in January for the 12 reporting nations.
This was the first time the cartel had released such monthly figures.
“The atmosphere in OPEC and among the ministers is much better,” Subroto said. He attributed a major part of the improvement to an August cease-fire that ended eight years of fighting between Iran and Iraq, key OPEC members.
He also said he sensed oil market participants felt “more comfortable toward OPEC behavior.”
Subroto predicted that non-OPEC nations would agree in the coming months to trim their output. Representatives of these nations meet today in London to discuss the situation.
“There is definitely a positive sign that . . . they will do something in reducing the supply,” he said.
He declined to speculate how much the nations might slash production. There have been reports of a possible 5% cut.
One participant at the non-OPEC meeting said in London on Monday that he was “fairly optimistic about this meeting because we’re all very friendly.”
The independent producers said in January that they had drawn up a number of proposals for cooperating with OPEC. Another source from a non-OPEC country said Monday that to his knowledge there was no single proposal that had gained favor with the group.
Subroto raised the possibility oil ministers from the independent producers might make a formal offer to their OPEC counterparts to trim output at a meeting next month.
Eight OPEC ministers already are scheduled to gather here at the end of March to monitor results of the new production agreement.