OPEC to steer steady course on oil output for now
Vienna, Sep 10: Top oil exporter Saudi Arabia and fellow OPEC producers signalled on Saturday they would keep output near a 25-year high for now, satisfied the policy is easing pressure on consumer economies.
But a drop in the price since mid-July and forecasts that demand for OPEC oil will decline in 2007 are beginning to worry some in the group that pumps a third of the world's oil.
The Organization of the Petroleum Exporting Countries, which meets here on Monday, has pumped steadily for over a year to fill consumers' oil tanks and guard against supply shocks.
The Saudi-driven policy has succeeded, with no demand unmet.
Oil has fallen sharply from its .40 a barrel record high of July 14, when Israeli strikes on Lebanon led to fears of a wider Middle East conflict. But at , it is still up this year and three times the price at the start of 2002.
''OPEC in general and Saudi Arabia in particular have done their best to supply the world with what it needs energy wise so you see inventories today are very comfortable, prices are coming down and I hope no one is concerned about a shortage of supply,'' said Saudi Oil Minister Ali Al-Naimi on his arrival.
''Demand is very well satisfied. I think the market is very comfortable and very well supplied. We are very happy with the situation.'' Officials from Algeria, Libya, United Arab Emirates and Iran agreed on Saturday that OPEC would most likely keep its current output ceiling of 28 million barrels per day.
''I think prices are moderating which makes us very happy,'' said UAE Oil Minister Mohammed bin Dhaen al-Hamli.
OPEC is mindful that the Atlantic hurricane season still has several weeks to run and U.S. Gulf of Mexico oil output has yet to recover fully from last year's storms.
Iran's dispute with the United Nations Security Council over its nuclear programme also has potential to drive oil prices higher. The United States is pressing for sanctions against the world's fourth biggest oil exporter.
Militants have shut about a quarter of Nigeria's output and Iraq's exports remain vulnerable to sabotage attacks.
Surging oil prices boosted the value of OPEC's crude oil exports by 45 percent to a record 3 billion last year.
Iran's OPEC governor Hossein Kazempour Ardebili told students news agency ISNA the ideal oil price was -.
2007 CONUNDRUM But there are signs that economic activity is easing in top oil consumer the United States as the housing market slows. The world's second biggest oil consumer China has raised lending rates to try to cool its economy.
Added to that, OPEC's own economists are forecasting demand for OPEC oil will drop 800,000 barrels per day to an average 28.3 million barrels per day as new non-OPEC production comes on stream, mainly in the Caspian.
OPEC President and Nigerian Minister of State for Petroleum Edmund Daukoru said he was very concerned at the recent steep drop in the oil price.
''The price has dropped within a month and we have been producing above quote for a very long time at a time when the market is softening, so I think we will have some issues to discuss,'' he told reporters.
Roger Diwan of PFC Energy was in no doubt that OPEC would need to cut production next year. ''The September meeting will be a good gauge of positions,'' he said.
OPEC's production ceiling for its 10 members bound by quotas, excluding Iraq, was set at 28 million bpd in July 2005.
Output this year has run just below the official limit, with everyone save top exporter Saudi Arabia pumping flat out.