* OPEC keeps 30 mbpd output limit until December
* Communique says members will adhere, but no quotas imposed
* Some fear price collapse if Saudi doesn't cut back
* Iran, Iraq not happy with price fall
By Amena Bakr and Peg Mackey
VIENNA, June 14 OPEC left oil output limits on
hold on Thursday, powerless to do anything other than hope top
producer Saudi Arabia scales back supplies unilaterally soon to
stem a $30 slide in prices.
Several in the Organization of the Petroleum Exporting
Countries called on Saudi to cut back to bring collective supply
down to the 30 million barrel a day limit to defend
Extra Saudi oil is largely responsible for lifting actual
OPEC output to 31.6 million bpd, well in advance of the group's
formal target, first set in December.
"There is at the moment an unjustified rise in the
organisation's production," said Algerian Oil Minister Youcef
Price moderate Riyadh though is keen to prevent high fuel
costs hampering a return to stronger economic growth in the
OPEC's communique said members had agreed to adhere to the
30 million bpd target, but without individual country quotas,
ditched last year, that cannot be policed.
Oil prices have dropped from a $128 peak for Brent crude in
March to $97, in part because the economic outlook has darkened
but also because of increased Saudi output that in April set a
30-year high of 10.1 million barrels a day.
Dependent on oil above $100 to balance budgets, price hawks
in OPEC worry crude could keep falling.
"There is a risk that prices will fall, uncontrolled, to
levels from which it will be very difficult subsequently to
bring them back," said Yousfi.
Iran, often at odds with Saudi Arabia at OPEC, is
displeased that higher Saudi output has pushed oil prices down
just as its exports drop because of Western sanctions against
its nuclear programme.
"We object to the drop in prices," said Iranian Oil Minister
"We are not happy with oil below $100," agreed Faleh
al-Amri, Iraq's governor to OPEC, underlining an emerging
consensus between Tehran and Baghdad on OPEC policy.
Higher Saudi output has lifted world oil inventories
rapidly, a deliberate move by Riyadh to counter the possibility
that Iranian exports fall heavily when a European Union embargo
on Tehran starts next month. Iran's production is already down
to a 20-year low as buyers seek alternatives.
Analysts say risks are growing that prices could fall
further if Saudi doesn't cut back.
"Looking at the third quarter, you'll see a modest
stockbuild and with the macro situation weakening its hard to be
constructive about oil prices," said Gary Ross, CEO of U.S.
consultancy PIRA Energy. "And the Saudis won't be in any rush
to cut back."
Naimi has called the extra Saudi volumes and consequent oil
price decline "a kind of stimulus" for the world economy. His
advisors say Riyadh is in a balancing act to raise stocks to
cover for Iranian losses while taking into account the prospect
that the fragile world economy will slow oil demand.
"There is a surplus in the market. Most of the surplus has
gone into storage, both fixed and floating, so the market in a
way hasn't felt that yet," said former Algerian Oil Minister
Chakib Khelil, now a consultant.
"This idea of trying to anticipate the shortfalls from Iran
could backfire. If demand weakens because of the economic
situation then you have a weak global economy and oversupply in
Oil prices though are anything but predictable, largely
because, on top of opaque supply and demand fundamentals,
markets have to take into account the politics of producer
Iran is the main uncertainty for prices - the impact of
sanctions on its oil sales, negotiations with world powers over
its nuclear progamme that resume in Moscow shortly and the
possibility that Israel might launch an attack on its nuclear
"History tells us that a global financial collapse could see
oil prices fall to $50 a barrel and below whilst an attack on
Iran take them to $150 and above," said David Hufton of London
oil brokers PVM.
(additional reporting Alex Lawler, Andrew Callus, Dan Fineren,
editing Richard Mably, William Hardy)