Vienna:  The Organisation of the Petroleum Exporting Countries, Opec agreed to keep crude output at a daily 30 million barrels Wednesday but left it up to its 12 members to voluntarily honour that ceiling without overshooting it, reflecting their differences over prices and output.

Ahead of Wednesday's talks, Iran had sought lower production for the group, which would raise prices. But it apparently bowed to Saudi Arabia, which wanted to maintain levels and which effectively sets Opec policy as its largest producer.

Despite the compromise, Saudi-Iranian tensions overshadowed much of the meeting.

The Opec statement said the target includes Libya, which is increasing production after its civil war ended. Libyan delegates say the country is pumping about 1 million barrels a day and plans to be up to pre-civil war levels of around 1.6 million barrels a day within six months.

Oil prices dropped Wednesday — apparently less as a reaction to the widely expected deal and more due to continued concerns about the European Union's debt crisis.

Benchmark crude fell $4.30 (Dh15.78), or 4.4 per cent, to $95.84 per barrel in midmorning trading in New York. Prices haven't been that low since Nov-ember 25.

The Opec statement said members had agreed to voluntarily lower production "to ensure market balance and reasonable prices," should future world supply exceed demand.

But by leaving it up to members to cut back on output if needed, the organisation effectively acknowledged that it had given up efforts to act as a unified regulator of the oil market. The 30-million figure already represents overproduction of 11 per cent from targets agreed to three years ago, the last time Opec set production quotas on individual nations.

New quotas

Opec Secretary General Abdullah Al Badri said new quotas would be discussed at the next Opec meeting in June, once Libya was producing at full strength.

Wednesday's decision should appease price hawks Iran and its allies and price doves Saudi Arabia and the other Gulf nations and avoids a repeat of Opec's last abortive talks in June, when oil ministers disagreed publicly on how much oil to sell. Saudi Arabia labelled that the worst Opec meeting ever. This time, they were keen to paper over the divisions. The outcome is "good for Opec, good for the Saudis, good for the market, and the Iranians are happy as well," said analyst John Hall, addressing the different needs of the players in Vienna — the Opec need for unity, Saudi claim to Opec primacy, a message to consumers that output will be stable and a signal of success to Iran, which presided over the talks.

Cooperation

Al Badri lauded "the spirit of cooperation in Opec which I could say we lost in the last meeting."

Relations between Saudi Arabia and Iran have been traditionally cool as the two countries vie for regional influence and were additionally burdened in recent years over concerns Tehran may be working to make nuclear arms.

Recent US allegations of Iranian involvement in an alleged plot to kill the Saudi ambassador to Washington have deepened the chill.

Tehran has denied the allegations and is seeking to mend fences. Iranian Foreign Ministry spokesman Ramin Mehmanparast revealed Wednesday that Iran's intelligence chief visited Saudi Arabia.

Iran is moving to refute US claims over its alleged attempts to make nuclear weapons and convince Saudi Arabia that Washington and Israel are seeking to sow seeds of discord between them.

Intelligence Minister Heidar Moslehi was reported to have met Saudi Crown Prince Nayef Bin Abdul Aziz Al Saud during the Tuesday visit.

Saudis won't make up for Iran shortfall

Going into their closed-door talks, Iranian oil Minister Rostam Ghasemi said he had met with Saudi counterpart Ali Al Naimi and gained a pledge that the Saudis would refrain from flooding the market with extra oil in case an international embargo on Iranian crude hurt Tehran's ability to sell its petroleum.

The US is reportedly seeking Saudi assurances that they are ready to make up for Iranian crude lost from the market should increased international sanctions be imposed on Tehran's crude. Ghasemi said he spoke to Al Naimi and Al Naimi "rejects" the notion "that he wants to replace Iranian crude if Iran faces [such] sanctions".

Al Naimi was circumspect, dismissing the issue as "speculative".