Monday, July 23 2018


OPEC seen holding output with oil price above $100

Update: May, 29/2013 - 12:53

LONDON ― OPEC meets on Friday in Vienna and is expected to maintain its crude production ceiling, with Brent oil prices steady above US$100 a barrel after sharp falls earlier this year, analysts said.

Ministers from the Organisation of Petroleum Exporting Countries (OPEC), which pumps about 35 per cent of global oil supplies, will convene in the Austrian capital amid angst over volatile financial markets and a weak outlook for world energy demand.

The dozen-member cartel, whose kingpin is Saudi Arabia and which includes also countries from Africa and Latin America, will also use its latest gathering at its headquarters to seek progress towards appointing a new secretary-general.

Industry experts expect that OPEC will leave its collective oil production ceiling at 30 million barrels per day (mbpd), where it has stood since the end of 2011, despite actual output exceeding this official target level.

"Expect little new, with the unchanged status quo for now," said Andrey Kryuchenkov, an analyst at Russian financial group VTB Capital, noting that $100 is "a decent and profitable level for most members."

Benchmark Brent oil prices, which stood at about $110 a barrel at the time of OPEC's previous meeting last December, plunged under $100 in April for the first time since mid-2012 on the back of global demand concerns, abundant US crude reserves and a strong dollar.

However, the market has since stabilised above the $100-a-barrel level that is deemed acceptable by Saudi Arabia – the biggest oil producer in the cartel and which has the largest amount of spare capacity.

The new energy minister of OPEC member the United Arab Emirates, Suhail al-Mazrouei, on Monday declared that current oil prices were "convenient and fair" and did not pose a threat to the global economy.

He added that a "fair" price was one that "fluctuates within a narrow range, guarantees a return for large investments needed to produce oil, and does not harm global economic growth."

However, this year's price falls have sparked calls from Iran – whose output has been hit by an oil embargo – for lower production to boost prices. Fellow OPEC hawk Venezuela has also declared that it would be open to a cut despite looking to keep prices at around $100.

"Iran's suggestion has always been to reduce OPEC production ceiling," Iranian oil minister Rostam Qasemi said earlier this month.

The oil "market is not in a very bad situation but (the oil price) does not correspond to our expectations," said the minister representing OPEC's fourth biggest producer after Saudi Arabia, Iraq and Kuwait.

Venezuela's Energy Minister Rafael Ramirez has meanwhile insisted that the cartel as a whole wants to see prices kept at about $100.

"We have a joint production level of 30 million barrels per day... that we can maintain in order to keep prices at $100 a barrel," Ramirez said on Monday.

"If during the discussions fears are expressed that such a level of production could affect prices, we would be open to a cut in production."

The cartel's "real" output climbed to 30.46 mbpd in April from 30.18 mbpd in March, according to OPEC data. But the International Energy Agency estimates that it stood at 30.7 mbpd last month, partly owing to a strong production increase from Saudi Arabia.

Also at this week's OPEC oil meeting, ministers will seek progress over the appointment of a successor to the cartel's secretary-general, Libyan Abdullah El-Badri.

Back in December, OPEC voted to re-appoint El-Badri to lead the cartel for another year after members failed to agree on a new leader.

Saudi Arabia has been battling against Iraq and Iran to have its candidate succeed El-Badri, who has steered the cartel through the world's financial crisis as its administrative head since 2007.

The cartel, which stopped giving individual output quotas in December 2011, aims to appoint a new chief later this year. ― AFP


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