SAUDI ARABIA. Saudi Arabian Oil Minister Ali al- Naimi said "maybe" there is a need for higher group production from the Organization of Petroleum Exporting Countries.
Al-Naimi, who arrived in Vienna yesterday, responded to questions from reporters after the Gulf Oil Review published a report quoting him as saying in a June 2-3 interview that OPEC might need to enlarge its collective production ceiling of 30 million barrels a day.
“I didn’t say it that way, I said maybe, be careful,” he told reporters upon arriving at his hotel yesterday evening. “Maybe more, maybe it can be anything, it can be less.”
OPEC, which supplies 40% of the world’s crude, meets in Vienna on June 14 to decide on output levels for the second half of the year. Brent crude futures fell to US$98 a barrel yesterday on al-Naimi’s comments and amid concern that Europe’s debt crisis will derail global growth, curbing energy demand. OPEC’s 12 members exceeded their quota by 1.9 million barrels a day in April, according to the International Energy Agency.
Ministers began arriving on June 10 in the Austrian capital as oil prices retreat from a high of US$128.40 a barrel reached in March. All 20 analysts and traders in a Bloomberg survey conducted last week expected OPEC to maintain its current group output limit.
A delegate from a Middle Eastern OPEC member state also said yesterday that no change in the group quota is likely.
“This is a very fragile time for the global economy so I don’t think they’re going to take any action,” said Mike Wittner, head of oil research for the Americas at Societe Generale SA in New York.
As the largest exporter, Saudi Arabia has more sway over OPEC decisions than other members and al-Naimi’s comments yesterday cast doubt over whether expectations for no change in the quota will prevail.
Kuwaiti Oil Minister Hani Abdulaziz Hussain said some OPEC members are concerned about oil-production levels and the direction of crude prices. He spoke in Kuwait yesterday before boarding a plane for Vienna. Brent crude has fallen 18% since May 1.
The latest crude price decline has been severe and there’s “tremendous” surplus in the market, Iraqi Oil Minister Abdul Kareem al-Luaibi said yesterday. Oil prices at US$100 to US$120 are “a reasonable and acceptable price index,” he said as he arrived in Vienna.
The Gulf Oil Review, which is published every two weeks by Petroleum Policy Intelligence, a U.K.-based consultant, yesterday reported al-Naimi as saying in an earlier interview that: “Our analysis suggests that we will need a higher ceiling than currently exists but, as usual, we will wait until we hear the presentation from the secretariat concerning the outlook for the international oil market, and the views of other member countries.”
Bill Farren-Price is chief executive officer of the research publication.
Demand for OPEC crude will rise in the second half of the year, to 30.89 million barrels a day in the third quarter from 29.21 this quarter, according to the OPEC secretariat’s latest monthly report. For the year as a whole, the average will be 29.98 million barrels a day, or about the same level as the group’s current ceiling. OPEC’s next monthly report will be published later today, while the IEA releases its monthly report tomorrow.
Customer demand is the main reason for Saudi Arabia’s decisions on production levels, al-Naimi said.
“When customers come what do you do, they say we want oil, what do you do, you give it to them,” al-Naimi told reporters in Vienna yesterday.
Saudi Arabia has been trying to lower the price of oil as slowing global economic growth counters concern of a supply shortage following a ban by western nations on imports from Iran. The kingdom has been pumping more than 9.5 million barrels a day since June 2011, the longest stretch for at least 11 years, according to data from the U.S. Energy Department.
Brent should drop to US$100 as supply outweighs demand, al-Naimi said on May 13 in Adelaide, Australia, when prices were near US$112.
The group’s ministers will hold closed-door discussions on policy on the afternoon of June 14, followed by a press conference. In tandem, delegates will also attend the OPEC International Seminar, a June 13-14 conference that features ministers and company officials as its speakers, including the chief executives of Royal Dutch Shell Plc and Total SA.
Ministers may also discuss candidates to replace OPEC Secretary-General Abdalla El-Badri, whose second term expires at the end of 2012. Saudi Arabia, Iran, Iraq and Ecuador have submitted candidates.
The other eight members of OPEC are Algeria, Angola, Kuwait, Libya, Nigeria, Qatar, the United Arab Emirates and Venezuela.