OPEC can keep its oil output ceiling as it is so long as Brent crude remains at about $100 a barrel, according to officials from some of the group’s members.
“There is balance between demand and supply, and this is reflected on prices, they are stable,” Abdul Kareem al-Luaibi, oil minister for Iraq, the group’s second-largest producer, told reporters in Vienna today. “We don’t want any shock to the market, the stability of prices is important for the global economy.”
The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global oil supply, will meet in the Austrian capital tomorrow to discuss its production policy. The 12-nation group is pumping more than its current target of 30 million barrels a day, helping Brent, which is used to price more than half the world’s crude, lose 8.5 percent this year to trade near $102 a barrel today.
The so-called OPEC basket price, which represents the group’s export crudes, stood at $101.11 a barrel on May 28 and has averaged $100.79 so far this month. West Texas Intermediate, the U.S. benchmark, is trading at about $93.
“Demand is normal, I don’t see any problem,” Pedro Merizalde, Ecuador’s minister of non-renewable natural resources, said in Vienna today. “If you look at the market compared to last year, the situation is pretty much the same.”
The group will probably maintain the status quo unless crude prices drop below $95 a barrel, Kamel al-Harami, an independent oil analyst based in Kuwait, said by phone from London yesterday.
“Anything below will raise the alarm bells,” said al-Harami, who is a former president of Kuwait’s Q8 brand of gas stations in Europe and Thailand. “OPEC is very comfortable. Prices are at the $100 region, and they are satisfied and will have a cash surplus year for their treasuries.”
When asked today if OPEC should keep the target, Kuwait’s OPEC governor, Siham Razzouqi, said “Why not?” Razzouqi is leading her country’s delegation to Vienna after Kuwait’s oil minister resigned earlier this week. Kuwait holds the presidency of OPEC this year.
Ministers from Venezuela and Iran, traditionally among the first within OPEC to call for supply cuts to boost prices, haven’t yet spoken to reporters in Vienna. Iranian Oil Minister Rostam Qasemi said two weeks ago that $100 is a “floor” price for crude and levels above this are “reasonable and fair,” the state-run Mehr news agency reported on May 13. His Venezuelan counterpart Rafael Ramirez agreed May 24 that the minimum price should be $100.
Curbs by Saudi Arabia pared OPEC output to 30.6 million barrels a day in January, the closest to the group’s formal target since its introduction in December 2011, data compiled by Bloomberg show. Output has since rebounded, reaching 30.9 million barrels a day last month.
Current conditions are “the best environment for the market” and “demand is great,” Saudi Arabian Oil Minister Ali al-Naimi said when he arrived in Vienna May 28. The kingdom is the world’s biggest crude exporter.
Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters in Vienna that OPEC should keep its group target unchanged, saying prices are “O.K.”
Senior officials from Angola, Saudi Arabia, Kuwait, Ecuador, Iraq, the United Arab Emirates and Venezuela have already arrived in the Austrian capital before tomorrow’s meeting. OPEC’s other members are Algeria, Iran, Libya, Nigeria and Qatar.
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