VIENNA (Reuters) – OPEC would wait until crude inventories fell to around 53 days of forward cover before considering raising output, Saudi Oil Minister Ali al-Naimi was reported as saying in remarks published late on Friday.
OPEC left output targets unchanged at a meeting on Thursday, as higher oil prices and optimism the global economy would soon start to recover outweighed concern over high crude stocks.
The oil price hit a six-month high over $66 a barrel on Friday.
“We will wait until inventories are at the level which we consider reasonable, which is about 53 days of forward cover,” the minister for the top oil exporter told industry publication Petroleum Argus in an interview, when asked what would prompt OPEC to increase supply. “I think that is a fair level.”
Oil stocks stand at around 62.4 days of cover, according to the International Energy Agency. Recession has caused the sharpest fall in demand in nearly three decades, so oil in stocks covers more days of demand.
But if demand picks up, the days of forward cover would fall without OPEC taking more oil off the market, Naimi said.
The rally in prices was sustainable, Naimi said. Oil has more than doubled from a December low of $32.40 a barrel.
“I believe it is highly sustainable,” he said. “I believe it is reflecting increased demand, improved economic recovery and confidence in national policies that have been adopted by many countries to improve the economy.”
State oil giant Saudi Aramco has capacity to produce above 12.5 million bpd if needed, without including capacity in the neutral zone between the kingdom and Kuwait, Naimi said.
That was higher than the 12 million bpd nameplate capacity that the kingdom has repeatedly stated Aramco would have once expansion plans under way were completed next month.
“We could produce 12.5 million bpd even if we did not have the neutral zone,” Naimi said.
“Our surface facilities and pipelines provide more than 12.5 million bpd. What restricts us is the wells. We have the reserves and the drilling rigs. If we want to produce more than 12.5 million bpd from Aramco alone, we can do that.”
The Saudi side of the neutral zone had capacity to pump around 500,000 bpd, he added. That would give total capacity at around 13 million bpd. The neutral zone is not included in Aramco capacity, but is included in the kingdom’s total production potential.
Crude capacity at the 1.2 million barrels per day (bpd) Khurais oilfield was ready, although gas facilities were still incomplete, he said.
When Saudi brings production on line, Khurais would likely pump at full capacity of 1.2 million bpd, he said. To keep overall output steady, pumping would slow at the giant Ghawar oilfield, Naimi said. Ghawar is the world’s biggest oilfield, and last year was pumping around 5 million bpd.
The 900,000 bpd Moneefa oilfield expansion project would be completed in 2013, two years later than the initial schedule, but only if global demand for crude warranted, Naimi said.