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OPEC Sees No Threat From U.S. Shale or Extra Iran, Libya

Jan. 27 (Bloomberg) -- U.S. shale oil production is no threat to OPEC and the group can absorb higher output from its members Iran, Libya and Iraq when supply outages are resolved, according to its Secretary-General Abdalla El-Badri.

“I welcome the tight oil of the United States,” El-Badri said at the Chatham House Middle East and North Africa Energy conference in London today. “Demand will grow and this will not affect OPEC in any way.”

Oil prices in a range of $100 to $110 a barrel are acceptable to both producers and consumers, El-Badri, 73, said. The market is balanced and comfortable, with stockpiles at healthy levels, he said.

Production from the Organization of Petroleum Exporting Countries may rise this year if Libyan protests subside, sanctions against Iran are lifted and Iraq meets its goals to lift output. Those reasons, coupled with steadily rising U.S. oil supply, have led the majority of analysts tracked by Bloomberg to predict lower oil prices for this year.

Brent crude futures, trading at about $107 a barrel in London today, are forecast to slide as U.S. shale output surges and better relations between Iran and the West ease concern that Middle East exports will be curbed. Brent will probably average $104.75 a barrel in 2014, according to the median of 46 analyst estimates compiled by Bloomberg. The grade averaged $108.70 last year.

Accommodations Made

OPEC predicts its 12 members will need to provide an average 29.6 million barrels of crude a day this year, about in line with the group’s current output, according to a monthly report on Jan. 16. The organization said it produced 29.44 million barrels a day in December, with output curbed by losses in Libya. OPEC is responsible for about 40 percent of world oil supply.

“When they come, we will sit and accommodate them and OPEC will be as before,” El-Badri said, referring to Iran, Libya and Iraq. “We have faced a lot of differences in the past and we were able to overcome them, and this we will overcome.”

It is unlikely there will be any discussion of limiting Iraq’s production level at OPEC meetings this year, El-Badri said. The country had been exempt from the individual member limits that the organization had published until 2009, while it rebuilt its oil industry after decades of war and sanctions.

El-Badri’s extended term as secretary-general will finish at the end of the year. The former Libyan energy minister, who was first appointed to the OPEC executive role in 2007, was given a second one-year extension in December after ministers failed to agree on a replacement from candidates representing Iran, Iraq and Saudi Arabia. El-Badri said today he doesn’t know if those three candidates are still in the running and had no details on the next stage of the process to find a successor.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group will next meet in Vienna on June 11.

To contact the reporters on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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