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Talks on quota system likely in June next year

(Dow Jones, November 20) – Less than a month before the Organisation of Petroleum Exporting Countries (Opec) meets formally, the organisation once again is riven over production increases implemented by Saudi Arabia and its allies outside the group's formal quota system.

Yet while the differences will no doubt continue through the December 14 meeting in Vienna, few expect a serious discussion of the organisation's official quota system. Rather, some key Opec figures are beginning to centre on the June meeting as the next time Opec will take out its sketchpad and debate whether output allocations need to change.

"We are likely to see a more serious action only in the following meeting next year," said a senior Gulf Opec official, who supported an unsuccessful effort led by Saudi Arabia to boost the formal quota system at a June meeting that ended in hostile disagreement.

"Most likely, next year, they will have to change them [the quotas]," concurred an Opec delegate from the group that fought the June quota increase.

An agreement by Opec to revise its quota system would seem to benefit the group collectively and its members individually. A better consensus on production targets within Opec could help stabilise oil markets that have been roiled by uncertainty over how much oil each member intends to pump.

Yet Opec remains split after Saudi Arabia and its allies boosted output this summer to make up for lost Libyan crude. Iran says Saudi Arabia, Kuwait and others should now return to their former output because Libya has restarted significant production.