Oil Price a Concern Says Venezuela as Al-Naimi VisitsBen Sharples and Pietro D. Pitts
The price of oil is a “concern for everyone,” Venezuela’s representative to OPEC said after a meeting with Saudi Arabia’s oil minister yesterday.
Rafael Ramirez, who is also Venezuela’s foreign minister, told reporters at a climate-change conference on Margarita Island that Saudi Arabia’s participation at the event was part of a meeting between friends. The Middle East nation is the biggest producer in the Organization Of Petroleum Exporting Countries, a 12-member group responsible for about 40 percent of the world’s oil supply.
Brent crude has collapsed to the lowest level in more than four years amid speculation that global supply is outpacing demand. OPEC’s leading producers are responding by cutting prices, resisting calls to reduce supply as they compete with the highest U.S. output in three decades.
Ramirez greeted Saudi Arabia’s Ali Al-Naimi as he arrived at the event before they began a private meeting, stopping briefly for a photo opportunity. The Saudi minister is due to attend a gas forum in Acapulco, Mexico, on Nov. 11-12.
“We spoke more than anything about climate change,” Ramirez told reporters, describing the meeting as “excellent.”
Brent for December settlement closed at $82.82 a barrel on the London-based ICE Futures Europe exchange on Nov. 4, the lowest level since October 2010. It traded at $83.07 at 1:02 p.m. Singapore time today. The benchmark grade for half the world’s oil is down more than 20 percent from its June peak, meeting a common definition of a bear market.
The U.S. is poised to leapfrog Saudi Arabia and Russia as the world’s largest oil producer amid a shale boom. Output increased to 8.972 million barrels a day through Oct. 31, the Energy Information Administration reported yesterday.
Al-Naimi’s trip is reminiscent of the 1990s, when Saudi Arabia’s competition with Venezuela and Mexico to supply the U.S. Gulf Coast drove down prices, according to Mike Wittner, the head of oil market research at Societe Generale SA in New York. To win the showdown against shale producers, the Saudis are trying to bring OPEC’s smaller members in line before the group’s Nov. 27 meeting in Vienna, said Seth Kleinman, the head of European energy research at Citigroup Inc. in London.
Alternatively, Al-Naimi may be seeking to collect pledges to cut production, Wittner said. OPEC pumped 30.974 million barrels a day last month, the most since August 2013, data compiled by Bloomberg show. That exceeded its collective target of 30 million, which was set in January 2012.
Saudi Arabian Oil Co., the state-owned producer, reduced its premium for next month’s sales of Arab Light crude to the Gulf Coast by 45 cents a barrel to the lowest this year, according to a company statement on Nov. 3. Shipments of its biggest crude stream will cost more compared with November for customers in Asia and Europe.
Venezuela’s call last month for an emergency OPEC meeting went unheeded. The country is preparing a proposal to halt the price declines, President Nicolas Maduro said Oct. 31 on state television. Ecuador, which supplies the least in OPEC, is collaborating on a way to increase prices at this month’s gathering, Finance Minister Fausto Herrera said Nov. 4 in Quito.
A strategy of defending prices by acting alone backfired for the Saudis in the past. In the 1980s, the kingdom cut output by almost two-thirds as new supply from areas such as the North Sea created a glut, leading to years of budget deficits.