OPEC 161st Meeting concludes

No 2/2012
Vienna, Austria
14 Jun 2012

The 161st Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) convened in Vienna, Austria, on 14th June 2012, under the Chairmanship of its President, HE Abdul-Kareem Luaibi Bahedh, Minister of Oil of Iraq and Head of its Delegation, and its Alternate President, HE Hani Abdulaziz Hussain, Minister of Oil of the State of Kuwait and Head of its Delegation.

The Conference congratulated HE Hani Abdulaziz Hussain on his appointment as Minister of Oil of the State of Kuwait and paid tribute to the services rendered to the Organization by his predecessor in office, HE Dr. Mohammad Al-Busairi. 

The Conference considered the Secretary General's report, the report of the Economic Commission Board (ECB), the report of the Ministerial Monitoring Sub-Committee (MMSC) - which met under the Chairmanship of HE Hani Abdulaziz Hussain, Minister of Oil of the State of Kuwait - and various administrative matters.  As customary, the Conference exchanged views on, inter alia, on-going multilateral developments on environment matters; the status of the Organization's energy dialogue with the European Union (EU); the outcome of ongoing cooperation between OPEC, the International Energy Forum (IEF) and the International Energy Agency (IEA) in areas defined by the Cancun Declaration of March 2010; the outcome of ongoing work with the G-20; and preparations for the United Nations Conference on Sustainable Development that will take place in Rio de Janeiro later this month.

The Conference reviewed recent oil market developments, in particular supply/demand projections, as well as the outlook for the second half of 2012, noting that the heightened price volatility witnessed during the early part the year 2012 was a reflection of geopolitical tensions and increased levels of speculation in the commodities markets, rather than solely a consequence of supply/demand fundamentals.  The Conference observed, however, that, more recently, downside risks facing the global economy, e.g. heightened Euro-zone sovereign debts concerns and the consequent weakening economic outlook, with its concomitant lower demand expectation, continue to mount.  These ongoing challenges to world economic recovery, coupled with the presence of ample supply of crude in the market, have led to the marked and steady fall in oil prices over the preceding two months.

The Conference noted, further, that although world oil demand is projected to increase slightly during the year, this rise is expected to be mostly offset by the projected increase in non-OPEC supply.  In addition, comfortable OECD stock levels - which presently are below the historical average in terms of absolute volumes but well above the historical norm in terms of days of forward cover - indicate that there has been a contra-seasonal stock build in the first quarter 2012 and this overhang is predicted to continue throughout 2012.  Stocks outside the OECD region have also increased.  Taking these developments into account, the second half of the year could see a further easing in fundamentals, despite seasonally-higher demand.

In light of this, the Conference decided that Member Countries should adhere to the production ceiling of 30.0 mb/d.  In taking this decision, Member Countries confirmed their readiness to swiftly respond to developments that might place oil market stability in jeopardy.

Moreover, given the aforementioned economic downside risks, the Conference directed the Secretariat to continue closely monitoring developments in the months ahead, keeping Member Countries abreast at all times.

The Conference decided that its next Ordinary Meeting will convene in Vienna, Austria, on Wednesday, 12th December 2012.

Finally, the Conference reiterated its expression of appreciation to the Government of the Republic of Austria and the authorities of the City of Vienna for their warm hospitality and the excellent arrangements made for the Meeting.