Global dependency on the members of the Organization of Petroleum Exporting Countries (OPEC) for oil will rise in the next five to 10 years as production by non-OPEC nations declines, the head of the International Energy Agency (IEA) said Friday. “We have seen an increase in non-OPEC supplies. But in the mid-term, non-OPEC production will decline,” Nobuo Tanaka, the agency's executive director, told reporters on the sidelines of a conference. “So, dependency on OPEC oil will increase.” “The cost of production in OPEC countries is also much cheaper,” he added. The agency's forecasts are generally regarded as bellwether indicators for the energy industry. OPEC's 12 members, who include Saudi Arabia, the United Arab Emirates and Kuwait, account for about 40 percent of the global oil consumption. Last month, the IEA forecast world oil demand will increase by 1.8 million barrels a day year-on-year to 86.6 million barrels a day in 2010. Much of the extra oil demand in 2010 is set to be soaked up by non-OPEC supply, which is expected to rise due to higher-than-expected output in Russia, the US, and China. Tanaka said the global oil market is currently well supplied. “Stock levels in OECD (Organization for Economic Cooperation and Development) countries is still high,” he said. “The OPEC has a very good spare capacity at this moment.” He said it was difficult to project what action is the OPEC going to take during its Oct. 14 meeting in Vienna. It is anticipated that there will be no change to OPEC production quotas in the October meeting. “We wish the OPEC will take a closer look of where fundamentals are going and take a quick action,” Tanaka said. It had left output targets unchanged at its last meeting March 17. Oil prices slipped on Friday, ending two consecutive sessions of gains, as traders took in a tepid US jobs report and amid rising supply levels in the world's largest oil-consumer. New York's main contract, light sweet crude for October, shed 42 cents to $74.60, after gaining more than three dollars in the previous two days. Brent North Sea crude for delivery in October lost 26 cents to $76.67 a barrel. Meanwhile, Iraq's oil minister said that Baghdad will consider abiding by OPEC quotas once its crude production increases to at least 4 million barrels a day in two to three years. Hussain Al-Shahristani said there is no rush to discuss quotas with other members of the Organization of the Petroleum Exporting Countries while Iraq's production level – currently at 2.5 million barrels a day – remains bellow the country's potential. “The current production 2.5 million barrels is no match to our potential,” Al-Shahristani said in an interview with The Associated Press. “Nobody is really in a rush to discuss (quotas) yet, but once we pass 3.5 or even 4 million barrels a day in two to three years time, we should enter into a very constructive discussion about new market shares.” Iraq is home to the world's third largest proven reserves of crude. Oil exports account for more than 90 percent of its state revenue. Last year, Iraq held two bidding rounds and awarded 12 contracts to develop 14 oil fields – all but two located in the south of the country. Al-Shahristani said Iraq hopes to boost its production capacity to 12 million barrels per day by 2017 with the new contracts. He also said the price of oil, currently hovering between $70 and $75 a barrel, is fair. “For the current market conditions, the price seems to be fair to both consumers and producers,” Al-Shahristani said. He dismissed concerns over Iraq's ability to significantly raise output and hammer oil prices. “Our policy is not to maximize our production, but to maximize our revenues,” Al-Shahristani said. “We are not going to produce more oil than the market can absorb and therefore force the price of oil down.”
