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Opec may keep output ceiling

Opec is set to stick by its oil output ceiling when it meets this week, as supply tensions linked to global crises help to keep crude prices high, benefitting producers.

The Organisation for Petroleum Exporting Countries (Opec), whose dozen member nations together supply about one third of the world’s crude, is widely predicted by experts to keep its daily output ceiling at 30 million barrels of oil.

While Opec is satisfied with current price levels at around $100 a barrel, the group is in fact pumping below its collective target owing to abundant supplies in top crude consumer the United States. Offsetting this are worries of potential supply strains as Ukraine risks sliding into all-out civil war.

Investors are concerned that a full-blown conflict in Ukraine would disrupt supplies and send energy prices soaring. Russia accounts for nearly 40 per cent of EU gas imports, with half of that transiting through pipelines in Ukraine.

While higher oil prices boost the coffers of producers, they can weigh heavily on economic growth, dampening demand and resulting in price weakness further down the line. Crude prices have meanwhile won support since Opec’s last meeting in December also on solid demand from Asian powerhouse China despite jitters over its economic slowdown.

“It should be a very quick meeting,” Bill Farren-Price, head of energy consultancy Petroleum Policy Intelligence, said of Opec’s upcoming gathering in Vienna on Wednesday.