OPEC holds oil production steady, keeps same leader ‘Projected crude demand in 2013 expected to contract to 29.7 mbpd’

VIENNA, Austria, Dec 12, (AFP): OPEC on Wednesday maintained its oil output ceiling but had to reappoint Secretary-General Abdullah El-Badri to lead the cartel for another year after members failed to agree on a new leader. As expected by markets, the Organization of Petroleum Exporting Countries kept its oil production ceiling at 30 million barrels per day (mbpd), with crude prices remaining at high levels ahead of an expected drop in OPEC demand next year. “We will hold” output, Saudi Arabian Oil Minister Ali al-Naimi said after a ministerial meeting in Vienna, home to OPEC’s headquarters.


The ministers also voted to keep Libyan El-Badri on for one more year after the cartel’s 12 members failed to agree on a replacement for the secretary-general who had been due to stand down at the end of 2012 after two three-year terms. “We extended (by) one year for the secretary-general,” Naimi told journalists. “We have an experienced secretary-general in position. Extending it one year is a very, very, very good decision,” he went on. The new term begins on January 1. The world’s biggest oil exporter Saudi Arabia had been battling against Iraq and political foe Iran to have its candidate succeed El-Badri, who has steered the cartel through the financial crisis as its secretary-general since 2007.

“The secretary-general sets the tone and leads the organisation as we go forward,” Nigerian Petroleum Minister Diezani Alison-Madueke had told reporters ahead of the decision to keep El-Badri. OPEC — which produces more than one third of the world’s oil — had in June already failed to reach a unanimous decision among its members over who should replace the Libyan. El-Badri said of his re-appointment: “I enjoy my tenure here in the Secretariat. I try to work my best to serve our member countries.” Independent energy market analyst Karin Kneissl said keeping him on had been “the most pragmatic decision” OPEC could agree on. “The secretary-general definitely has a role as a host, as a coordinator, but the secretariat as such can always function without a fully-fledged practical agreement on who will take the post,” she told AFP.
“It’s not for the first time that we’ve seen a stalemate between a candidate coming from Iran and a candidate from Saudi Arabia.”


OPEC members had failed to agree from three choices — Majed al-Moneef, a former Saudi governor to OPEC, ex-Iranian oil minister Gholam Hossein Nozari and former Iraq oil minister Thamir Ghadhban.
OPEC meanwhile decided to maintain its output ceiling, which stands at about one million barrels below its current daily production. OPEC is pumping out extra crude as Saudi Arabia compensates for lost Iranian output caused by Western sanctions on the Islamic Republic, and as other members look to maximise profits.
The cartel on Wednesday said it had decided to maintain the target “given the demand uncertainties.”
It added in a statement: “Indeed, the biggest challenge facing global oil markets in 2013 is uncertainty surrounding the global economy, with the fragility of the eurozone remaining a major concern.
“World oil demand is forecast to increase slightly during the year 2013, this is likely to be more than offset by the projected increase in non-OPEC supply” such as from the United States.


“Projected demand for OPEC crude in 2013 is expected to contract to 29.7 mbpd.” A weakening of OPEC demand risks weighing on oil prices, despite a background of Middle Eastern unrest, notably over Iran’s disputed nuclear programme, analysts said. Benchmark crude oil prices rose above $108 a barrel Wednesday on supply concerns after OPEC reported a drop in crude production last month, traders said. The International Energy Agency, representing oil consumers, raised its estimate for global oil demand in the last three months of the year to 90.5 million barrels per day on Wednesday, the same level seen for 2013 as a whole. It added that a slump in Iranian oil output to levels last seen during its wars with Iraq in the 1980s should continue into 2013, while Tehran insists it has not been affected by international sanctions.

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