There is a "gentlemen's agreement" between OPEC members to accommodate increasing output from Libya, the North African country's oil minister said Saturday.
The comments by Abdul-Rahman bin Yazzah indicate that while there is no formal deal among members of the 12-nation Organization of the Petroleum Exporting Countries to cut output, the producer group is willing to take the step as Libya's production ramps up to pre-civil war levels of 1.6 million barrels per day.
"If the situation calls for it, they will meet," bin Yazzah said, adding that the decision is dictated by supply and demand. But "there is a gentlemen's agreement to accommodate Libya's production," he told reporters after a meeting of the Organization of Arab Petroleum Exporting Countries, or OAPEC, in Cairo on Saturday.
OPEC agreed Dec. 14 to raise its production ceiling to about 30 million barrels per day. The decision marked an increase from its earlier output target and was the first time it changed the ceiling in three years.
The producer bloc has grappled for years with noncompliance by member with their allotted quotas. The situation became further muddled over the past year as Libya's civil war ground production from that nation to a near standstill. To offset the drop, other OPEC members, most notably Saudi Arabia, stepped with additional barrels.
Libya is currently producing slightly more than 1 million barrels per day, the chairman of the National Oil Corp. Nouri Berruien said. The country expects to return to full production by mid -2012, he said _ much quicker than analysts had anticipated.
Aside from accommodating increased oil from Libya and Iraq, OPEC must also deal with an economic crunch in Europe where sovereign debt worries are squeezing growth forecasts and, in turn, dampening demand for oil.
If OPEC overproduced, or fails to curb its members' production to adjust for Libya's return to the market it could see prices fall below the $100 per barrel level favored by price hawks like Iran and Venezuela. Others like bloc kingpin Saudi Arabia favor prices between $80-85 per barrel.
The US benchmark crude futures contract on Friday settled at $99.68 per barrel in New York, while it's North Sea counterpart, Brent, settled at $107.96 a barrel in London.
Separately, Syria's oil minister said that international sanction had affected oil production in the country.
Sufian Allaw said that production was down by about 35 percent, reaching 255,000 barrels per day. Allaw said Syria was no longer exporting crude and that European oil companies like Shell and Total had halted their operations in the country because of EU sanctions.
"We have no ability to export now" because of the sanctions, he said.
The measures were imposed as Syria's government comes under tremendous criticism for its deadly approach to dealing with protesters demanding the end of President Bashar Assad's regime. The United Nations says more than 5,000 people have been killed since March, when the uprising began and the regime responded by deploying tanks and troops to crush protests across Syria.
Allaw said that current oil production effectively covered domestic refining capacity and that Syria still needed to import refined fuels.