NICOSIA, Cyprus — Saudi Arabia has abandoned its commitment to limit crude oil production to 4.35 million barrels a day, the Middle East Economic Survey reported over the weekend.
The newspaper said that production in July by the Organization of Petroleum Exporting Countries was averaging more than 19.5 million barrels per day and that virtually every member country was exceeding quotas.
Saudi Arabia had said it would comply with an OPEC agreement discarded in December that limited its daily production to 4.35 million barrels. But the survey reported that "the Saudis are simply not prepared to remain as the only OPEC country observing the oil quota."
"This is in line with the spirit of the message delivered by King Fahd to the OPEC ministers who met in Taif, Yugoslavia, in June, 1985, which said should member countries feel they have a free hand to act, such freedom should be enjoyed by all member countries," it said.
The newspaper said that until a new and binding agreement on production control and quota distribution is reached between the oil exporting nations, Saudi Arabia will not feel obliged to abide by any cartel production limitation.
No Plan to Flood Market
Saudi Arabia does not plan to flood the market with its full production capacity of 8 million to 9 million barrels per day, the newspaper said. "But on the other hand, there is no reason why Saudi output should not continue at its present average of between 5 (million) and 6 million barrels per day."
Oil prices recently have dipped below $10 a barrel from an average price of $30 a barrel in December, when OPEC abandoned production and price controls in a bid to regain its "fair share" of the market from independent producers.
OPEC production has soared to a 4 1/2-year high this month, even though world supplies already exceed demand by at least 2 million barrels a day.
In the first half of July, Saudi production increased to more than 5 million barrels per day and was expected to reach nearly 6 million by the end of the month, the newspaper said.
Meanwhile, Iran's deputy oil minister, Hussein Kazempour Ardebeli, attacked the oil policies of Saudi Arabia after a meeting in Tripoli with the No. 2 man in Libya's leadership, Maj. Abdel-Salam Jalloud, Iran's national news agency reported.
The agency, monitored in London, reported that both sides at their meeting on Sunday "condemned some OPEC member states for overproducing, describing the move as a violation of OPEC's principles."
Ardebeli, who later flew to Algiers, said overproduction of crude oil by Saudi Arabia was "pitiful" and against the interests of other OPEC countries.
An official Saudi spokesman quoted by the Saudi Press Agency has denied that the kingdom was flooding the oil market and called for a just agreement on production output and quotas.
The Iranian news agency quoted Jalloud as reiterating that Libya was ready to stop oil production for a limited period. Algeria, Libya and Iran want a drop in OPEC output to prop up prices.
OPEC members are due to meet again in Geneva next week in a bid to settle their differences.