OPEC Leaves Oil Supplies Unchanged
OPEC – the Organization of Petroleum Exporting countries – has decided to leave oil output levels unchanged. This puts pressure on Saudi Arabia, the largest oil exporter, to reduce their supply if prices keep dropping. The Saudis have openly states that they like the price of West Texas Intermediate (WTI) to be around $80 per barrel, and Brent oil to be around $100 per barrel.
OPEC members now need to reduce their supply by 1.6 million barrels per day to maintain the output limit of 30 million barrels per day. Saudi Arabia has been exceeding their limits to make up for the decline in Iranian exports due to international sanctions over their covert nuclear weapons program. A European Union boycott of IRanian oil begins July 1st. The Saudis have assured the international community that they will make up for any shortfall in Iranian exports to maintain crude oil prices.
Saudi Arabia has been the most influential member in OPEC in recent years, very closely monitoring crude oil prices and global oil supplies as Brent crude rose in March to their highest levels in 4 years. However there are concerns from OPEC members that the debt crisis in Europe will further cut demand for crude oil and drive prices lower, so they are favoring a supply reduction.
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