Ecuador to boost oil past OPEC limits
QUITO, Ecuador — Ecuador has dealt a blow to OPEC unity by announcing it will start raising oil production this month, arguing it needs the money.
OPEC has for years cheated on its own agreements, particularly when oil prices fail to recover after an output cut. But Ecuador has taken the rare step of saying publicly it will increase production, making it impossible for the group to conceal the desertion.
The Latin American country won’t be able to meet its commitment to lower output by 26,000 barrels a day to 522,000 a day, as agreed with OPEC last year, Oil Minister Carlos Perez said in an interview with Teleamazonas late Monday.
“There’s a need for funds for the fiscal treasury, hence we’ve taken the decision to gradually increase output,” Perez said. “What Ecuador does or doesn’t do has no major impact on OPEC output.”
The amount Ecuador had agreed to cut accounts for less than 25 seconds of daily global consumption. Still, it does create a precedent in the Organization of Petroleum Exporting Countries, opening the door for other producers to follow suit.
“Ecuador’s latest statement will not matter for global balances but it shows the challenges for OPEC members given the cuts failed to raise prices,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd., a Londonbased consultant. The announcement may “again give rise to fears of the deal falling apart,” she said.