Sun. Apr 21st, 2024

The OPEC oil cartel was widely expected on Friday to maintain its collective output ceiling amid lingering worries over the health of global energy demand.

Financial markets expect that OPEC will leave its oil output ceiling at 30 million barrels per day (mbpd), where it has stood since the end of 2011, despite actual output running above this target level.

The Organization of Petroleum Exporting Countries (OPEC), whose 12 member nations pump 35 percent of global oil supplies, remains mostly satisfied with benchmark Brent oil prices of around $100 per barrel.

Ali al-Naimi, the influential oil minister of OPEC kingpin Saudi Arabia, dropped a heavy hint when he told reporters that the “international oil market is stable and balanced”.

He added that “prices are at a level suitable for producing and consuming nations, and to the oil industry”, indicating that no change was likely.

However, in the run-up to this week’s gathering, the oil market fell sharply on Wednesday as traders fretted over demand worries linked to gloomy downgrades to economic growth forecasts — particularly for top energy consumer China.

Iran has already called for lower output in order to maintain and even boost crude price levels.

However, traditional hawk Venezuela declared Thursday that there was agreement among member nations to maintain output.

“We are all in agreement to maintain the 30 million (bpd) production total, even if some countries are overproducing,” Ramirez told reporters.

The comments appeared to mark a shift in tone in Venezuela’s position, after the Latin American nation had indicated earlier in the week that it was open to an output reduction.

“Fundamentally, (Venezuela’s position) is maintaining a minimum price level of $100 per barrel. This is an implicit agreement of all OPEC countries, benefitting all countries, and there is a consensus on that,” Ramirez said, stressing that “our preoccupation is the minimum price”.

Angola and Kuwait have expressed doubts that any output reduction would be agreed.

Iraq has meanwhile argued that the market was “well supplied” but cautioned against any hasty move that would upset markets and damage the fragile global economy.

“We do not want to cause a shock to the market which will affect the global economy,” Iraqi Oil Minister Abdulkarim al-Luaybi told reporters in the Austrian capital.

Markets took a knock this week after the International Monetary Fund cut its 2013 growth forecast for China — the world’s biggest energy consumer — to around 7.75 percent, from 8.0 percent last time, and cited a sluggish global recovery.

And the Organisation for Economic Cooperation and Development also cut its growth forecasts for most advanced countries apart from Japan.

At the same time, OPEC ministers remain mindful of the prospect of booming shale oil and gas production in the United States.

Brent oil, 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 producer in the cartel.

This week’s gathering will also seek to identify the criteria under which members will decide their next secretary general at the next scheduled meet in December.

Source: AFP

By vivian