DUBAI / LONDON – (Reuters) – OPEC will only hold an emergency meeting if oil climbs above $100 and stays there, although the group’s Gulf members could informally add supply if needed, a delegate from a Gulf OPEC member state said on Thursday.
Brent crude this week hit a 27-month high of close to $99 a barrel, raising concern in consuming countries about the impact of higher fuel costs on the tenuous economic recovery.
“OPEC will only have an extraordinary meeting if oil prices exceed $100 and stay there. We don’t want the market to panic,” the delegate told Reuters.
“And if the prices reach $100 and we see that there is a need of supply from our customers, Gulf countries will start producing above their quotas, but this has not happened yet.”
Most officials in the Organization of the Petroleum Exporting Countries maintain there is no need to change a production-restraining policy adopted in 2008, in the aftermath of economic crisis. OPEC is not scheduled to hold another meeting until June.
That stance was reiterated earlier on Thursday by Libya’s top oil official, who said $100 oil would not harm the world economy and there was no need for OPEC to add more supplies.
“We think there is enough supply and there should not be any meeting at this point in time,” Shokri Ghanem, chairman of Libya’s National Oil Corporation, told Reuters by phone.
OPEC’s core Gulf members – Saudi Arabia, Kuwait and the United Arabia — are the most able to pump extra oil in the 12-member group because they hold the bulk of the world’s unused oil production capacity.
Saudi Arabia, which as the holder of the world’s largest reserves is keen to preserve long-term demand for oil, has traditionally stepped in to add more oil if it considers the market is rising too fast.
There is no sign of that happening so far. Surveys show OPEC’s Gulf members are producing closely in line with their supply targets, or OPEC quotas.
A second Gulf OPEC delegate said the price strength would probably not last and customers were not asking for extra oil.
Oil supply disruptions in Alaska and Norway, now being resolved, lifted prices this week. Analysts say Brent crude has been boosted since the start of the year by investment flows and technical factors, which could fade.
“Prices approaching $100 now is just a temporary situation and will not last and if economies can stand $98, they can afford $100. It’s not like we’re talking about prices of $120,” the delegate said, adding the price strength was not backed up by any lack of oil.
“We didn’t hear anything from our customers about shortages of supply.”
Libya’s Ghanem and a delegate from Kuwait agreed the price strength was probably temporary.
“Inventories are now lower than they were last year, but I see the current price level as temporary. Once it starts getting warmer, prices will return to the $70-$90 price range.”
OPEC’s discipline with the system of supply targets agreed in December 2008 has declined as the market has rallied.
By December 2010, OPEC was delivering 55 percent of promised curbs, a Reuters survey found. Even so, Saudi Arabia, Kuwait and the United Arab Emirates were delivering most of their share of the cutbacks.
The third delegate said Gulf states were producing within their agreed limits, adding it was too early to say whether OPEC would decide on an output change when its next scheduled meeting took place in June.
By contrast, the International Energy Agency, which represents 28 industrialized countries, has warned about the risks to economic recovery from rising oil prices.
The IEA said in December that OPEC might come under pressure to increase supplies in 2011.