It’s “too early” for OPEC countries to consider cutting oil output, even as prices tumbled below $100 a barrel this week, according to Noe van Hulst, secretary general of the International Energy Forum.
Brent crude fell yesterday to as low as $98.74, its weakest in six months, triggering concerns that Saudi Arabia and other producers in the Organization of Petroleum Exporting Countries may cut output on concerns that slowing economic growth will sap oil revenue.
Reacting to daily fluctuations in prices was possible during the spring when the market was affected by the sudden fall in Libya’s output and everyone “needed to assess whether this situation would persist or not,” van Hulst said. The situation today is entirely different as prices are going down, yet it’s still “unwise” to react to short-term price fluctuations, the head of the Riyadh-based organization, known as IEF, said in an e-mail today.
Both OPEC and IEA have slightly revised demand growth projections for 2011, and van Hulst said “it is too early to make any strong calls about 2012 since so much will depend on where the broader world economy will be heading.”
OPEC, responsible for about 40 percent of world oil supply, reduced its consumption estimate for this year by 150,000 barrels a day. That means global demand will rise by 1.2 million a day, or 1.4 percent, to 88.1 million a day, the organization said yesterday in its monthly market report.
Global oil demand will increase by 1.2 million barrels a day, or 1.4 percent, this year to 89.5 million, according to the International Energy Agency monthly report published today. That’s 60,000 barrels a day less than what the agency predicted in last month’s report.
“I think we all first need to get a clearer view, over the next month or so, on where oil demand will be heading in 2012 and beyond. Obviously, that is the main concern now,” he said.
IEF is the largest global gathering of energy ministers with over 80 countries including OPEC member states, the U.S., China, India, Russia, Brazil and Japan.
At the last OPEC meeting in June, the Saudi oil minister Ali al-Naimi confirmed his intention to help the global recovery by preventing runaway oil prices, Sadad al-Husseini, Aramco’s former executive vice president for exploration and development, said today by e-mail.
“I doubt very much that the Saudi leadership will rush to any hasty action in relation to reducing oil production allocations until they see much more of the direction in which the global economy is headed,” said al-Husseini, who runs Husseini Energy, an energy consultant based at Dhahran, Saudi Arabia.