VIENNA, (Reuters) – OPEC ministers on Monday gathered in Vienna ahead of a meeting to review output policy, but were widely expected to leave formal targets unchanged, especially as a powerful hurricane could lift oil prices.
A hard core of ministers has said the market is over-supplied following months of over-production led by top exporter Saudi Arabia.
They have argued output must be reduced sooner or later to bolster prices, which have plunged by nearly 30 percent from a record above $147 a barrel hit in July.
The oil market touched a five-month low just above $105 on Friday, under pressure from economic weakness and lower fuel consumption.
They recovered to above $107 a barrel on Monday as traders weighed the risk Hurricane Ike could crash into energy installations in the U.S. Gulf of Mexico after sweeping through Cuba.
“Of course, of course. I believe that the market is over-supplied,” Iranian Oil Minister Gholamhossein Nozari told reporters on arrival in Vienna early on Monday.
Iran, together with Venezuela, which also has a big-spending, populist government, has been at the forefront of those seeking a high price.
Nozari has said $100 a barrel was the minimum acceptable, while the country’s OPEC governor was quoted on Sunday as saying the price could not fall below $80 as that was the cost of bringing on some new fields.
But when pressed on what the 13-member Organization of the Petroleum Exporting Countries (OPEC) would agree when it meets on Tuesday, Nozari said only: “We will review the market and then decide.”
Analysts have said the most likely outcome would be to leave targets unchanged, which still leaves the group scope to reduce supply surreptitiously.
“I don’t believe there is any possibility we will change production levels,” Ecuador’s Oil Minister Galo Chiriboga told reporters on Sunday.
OPEC is estimated to be producing 790,000 barrels per day (bpd) above the collective ceiling of 29.67 million bpd for its 12 members with output limits.
Saudi Arabia, which could be pumping as much as 750,000 bpd above its target, is responsible for most of the extra crude.
Ali al-Naimi, the kingdom’s oil minister, was not expected to arrive in Vienna until the early hours of Tuesday.
Shortly before oil prices hit their July record of $147.27, Saudi Arabia called an emergency energy meeting in Jeddah and pledged to pump 9.7 million bpd, taking output to the fastest rate since 1981.
But demand in top oil consumer the United States fell at the fastest rate since 1982 in the first half of this year, raising the prospect of a build up in stocks.
OPEC as a group last agreed an official change a year ago in Vienna when it agreed to a modest increase of 500,000 bpd.
The price of oil was then less than $80 a barrel, compared with average prices this year of above $100.
Their strength has been one of the top issues in the U.S. election campaign and made it politically difficult for OPEC to publicly revise its targets.
“We have a neutral view on that (OPEC) meeting, with a bias that it will end up in supportive words rather than supportive action,” analyst Olivier Jakob of Petromatrix wrote in a note.
Given that the market already expects Saudi Arabia to cut its production, he said there was a case for making it public.
“Ike is however probably complicating things a little bit as it is not the best timing to announce a reduction in output while destructive potential still looms in the U.S. Gulf,” Jakob added.