OPEC ministers agreed Saturday to pump more oil, running the risk of lower prices to accommodate a move by top producer Saudi Arabia to assert more influence over the market.
The 11-member oil cartel raised its stated production ceiling by 10 percent, with the Saudis and their allies in Kuwait and the United Arab Emirates prevailing over other producers who fear prices will fall.Cheaper costs for oil, the most vital commodity in the world economy, would be a bargain for consumers but bad news for the Organization of the Petroleum Exporting Countries and other producers.
Iran and Libya tried but failed to hold the line at a smaller increase or no increase at all, worrying that global demand will not rise fast enough to accommodate all the new oil.
The oil ministers set OPEC's official production ceiling at 27.5 million barrels a day, up from the current 25.033 million-barrel limit that is being widely violated. The new number was at the top end of those being negotiated over the past four days.
The increase in actual oil production will be more modest than the stated 2.5 million barrels a day, given the massive cheating on output quotas that complicates any correlation between OPEC's official numbers and real shipments going onto the market.
In a way, OPEC's new numbers - reached in its most contentious talks in years - merely narrow the gap between the facts and fictions of the group's oil production.
But the revised numbers aren't entirely bogus. OPEC oil production could go as high as 28.5 million barrels a day - 1 million barrels over the new ceiling and about 700,000 barrels over the group's current true production, a Persian Gulf source said, speaking on condition of anonymity.