OPEC expects lower oil output in July

VIENNA, (Reuters) – OPEC members will reduce the group’s output to adhere to its 30 million barrels per day (bpd) output ceiling and the effects should be seen in July, OPEC Secretary-General Abdullah al-Badri told a news briefing on Friday.

The Organization of the Petroleum Exporting Countries agreed at a meeting in Vienna on Thursday to maintain the 30 million bpd production ceiling. Badri said that would entail curbing actual supplies by 1.6 million bpd.

“We overproduced by 1.6 (million barrels per day) now we decide to take out the 1.6 and stay with the 30 million,” he said. “Everybody will respect that.”

“Maybe this will start sometime in July. You need some time,” he added.

OPEC did not issue individual member quotas as part of the 30 million bpd production agreement, which it adopted at its last meeting in December.

But Badri said cartel members, except for Iraq and Libya, had their own individual output allocations based on the group’s November 2011 production, which were agreed at the December meeting last year.

“It is not a quota,” he said. “The most important thing for me is the 30 million bpd,” he added.

Iraq was not included in OPEC’s output agreements for years, but is now part of the 30 million bpd overall target and is increasing supplies. Libya’s production in November last year was still recovering after being was virtually shut down during the 2011 civil war.

Saudi Arabia, OPEC’s top producer, says it will comply with the new agreement, but stopped short of saying that it would reduce supply. Riyadh has been pumping around 10 million barrels per day (bpd) – a 30-year high – for several months running.

On Friday, Oil Minister Ali al-Naimi said the kingdom was committed to stability of oil supply and avoiding shortages.

“The whole idea is that there will not be any shortages in the oil market,” he told reporters. “That has been Saudi Arabia’s policy all along, to manage stability of the oil market, keeping it in balance.”

As the group’s sole swing producer, Riyadh has largely been responsible for the output that exceeds the ceiling of 30 million bpd.

This has not sat well with Iran, whose production has sunk to a 20-year low – according to secondary sources – due to Western sanctions against the its nuclear program.