OPEC can keep its current oil-output ceiling unchanged so long as Brent crude remains at about $100 a barrel, officials from some of the group’s member states said.
“Current OPEC production is meeting demand,” United Arab Emirates Oil Minister Suhail Mohammed Al Mazrouei said in an interview in Vienna today. “Prices are stable, and they have been stable for quite some time.”
The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global oil supply, will meet in the Austrian capital tomorrow to determine production policy. The 12-nation group is pumping more than its current target of 30 million barrels a day, putting pressure on Brent, which is used to price more than half the world’s crude. The grade has lost 8 percent this year and traded near $102 a barrel today.
The 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.
Oil ministers from the U.A.E., Iraq, Libya and Angola said there was no need for a change in policy.
“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 today in Vienna. “We don’t want any shock to the market, the stability of prices is important for the global economy.”
OPEC will probably maintain the status quo unless prices for Brent crude 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 filling 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.”
Asked today if OPEC should keep the target, Kuwait’s OPEC governor, Siham Razzouqi, said “Why not?” Razzouqi is leading her country’s delegation after Kuwait’s oil minister resigned earlier this week. Kuwait holds the OPEC presidency this year.
Venezuela’s Energy Minister Rafael Ramirez said there is consensus among the group to keep the output ceiling even as he called for some countries to rein in excess production.
“We are worried that the minimum price remains at $100,” Ramirez said. “I have a lot of doubts on demand, whether the tremendous crisis in Europe will be maintained, we need to monitor that very closely as well as rising inventories.”
The country, along with Iran, is traditionally among the first within OPEC to call for supply cuts to boost prices. Iranian Oil Minister Rostam Qasemi declined to answer questions from news media after arriving in the city today.
Qasemi said two weeks ago that $100 is a “floor” price for crude and levels above this are “reasonable and fair,” Iran’s state-run Mehr news agency reported on May 13.
“The higher the oil price, the better it is for Algeria,” Karim Djoudi, Algeria’s finance minister, said in an interview yesterday at an African Development Bank meeting in Marrakech, Morocco. “Energy is becoming scarcer as time goes by, so the price should either stabilize or increase.”
Production curbs by Saudi Arabia pared OPEC’s output to 30.6 million barrels a day in January, the closest the group has come to adhering to its formal target since introducing the limit in December 2011, data compiled by Bloomberg show. Output has rebounded to a six-month high, reaching 31.03 million barrels a day this month.
Current conditions are “the best environment for the market” and “demand is great,” Saudi Oil Minister Ali al-Naimi said May 28. The kingdom is the world’s biggest crude exporter.
Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters that OPEC should keep its group target unchanged, saying prices are “O.K.”
Senior officials from Angola, Saudi Arabia, Kuwait, Ecuador, Iran, Iraq, the United Arab Emirates, Algeria, Libya and Venezuela have already arrived in the Austrian capital. OPEC’s other members are Nigeria and Qatar.
“They’re not going to do anything unless the price leads them that way,” Roy Mason, founder of tanker tracker Oil Movements, said by phone from Halifax, England. “The price has gone down, but within the pain margin. It’s still within comfort zone.”