OPEC agreed on Wednesday to hold its crude production ceiling at 30 million barrels per day despite oversupply concerns and competition from cheaper shale oil.
The Organization of Petroleum Exporting Countries, which pumps out about one third of the world’s oil, failed again to decide on a new secretary-general amid group tensions, instead keeping Libya’s Abdullah El-Badri as its administrative head for 2014.
And Libya, where output of crude oil has fallen sharply on unrest in the country, will assume the cartel’s rotating presidency for next year, OPEC added in a communique.
The decision to maintain the oil ceiling had been widely expected by markets.
The cartel, which could see higher production from its members Iran, Iraq and Libya in coming months, nevertheless faces competition from non-OPEC producers of shale oil.
The International Energy Agency has said repeatedly that the shale energy boom is changing the landscape of global energy markets.
“We don’t say we are not concerned” by shale, El-Badri told a press conference on Wednesday — but insisted that OPEC could accommodate US shale output, currently at 2.7 million barrels per day and set to rise further.
OPEC said in its statement that “global economic uncertainty, with the fragility of the eurozone remaining a concern” was the biggest challenge facing world oil markets in 2014.
It said that “although world oil demand is forecast to increase during 2014, this will be more than offset by the projected increase in non-OPEC supply” amid a boom in oil and gas being extracted from North American shale rock.
OPEC added: “Nevertheless, in the interest of maintaining market equilibrium, the conference decided to maintain the current production level of 30 million barrels a day.”
Ahead of the meeting, member nations led by the world’s biggest oil producer Saudi Arabia insisted that there was no need to change the ceiling.
“We know demand is good, economic growth is good, supply is good,” Saudi Oil Minister Ali al-Naimi told reporters at OPEC headquarters in the Austrian capital.
The group, with a dozen member nations from the Middle East, Africa and Latin America, is producing slightly below its output target.
But production could increase in the coming months as Iraq and Iran look to export more crude after sizeable falls in recent years. Libyan supplies may also recover.
Saudi Arabia and other OPEC members argue that benchmark crude oil prices, currently averaging $100 per barrel, provide acceptable income for producers without weighing too heavily on consumers.
“The price of oil is acceptable and there will be some additional oil coming to the market from OPEC and outside OPEC,” Qatar’s Energy Minister Mohammed al-Sada said on Wednesday.
“What is more important is that this additional oil will be needed for the signs of economic recovery.”
Sada added: “The current (output) situation seems to be comfortableâ¦ 30 million barrels seems to do justice to the current economic situation.”
Iran’s Oil Minister Bijan Zanganeh this week said that the country would be able to “immediately” export 4.0 million barrels per day (bpd) once sanctions are lifted in the wake of the international deal to roll back its nuclear programme.
Iranian crude oil exports have been slashed to about 1.2 million bpd from 2.5 million bpd in 2011, according to Zanganeh.
At the same time, Iraq’s Oil Minister Abdelkarim al-Luaybi said his country hoped to export 3.4 million bpd of crude oil next year, including 400,000 bpd from Iraqi Kurdistan, as it looks to recover from years of bloodshed.
This compares with exports of 2.38 million bpd in November.
The market though doubts how quickly new production can come on board.
Libya’s output has plunged to about 250,000 bpd amid deadly fighting between radical Islamist fighters and the army, but oil minister Abdelbari al-Arusi said he hoped production would be back to its normal level of 1.5 million bpd within two weeks.
Nigeria meanwhile faces regular acts of sabotage to its oil pipelines.
OPEC decided on keeping El-Badri as secretary general after members failed to agree on candidates put forward by Iran, Iraq and Saudi Arabia.
OPEC had already voted in December last year to keep on El-Badri, who has steered the cartel through the financial crisis in the role of administrative head since 2007.