CAIRO (AP) – Saudi Arabia’s oil minister said current global oil prices are “perfect,” as several key Arab OPEC members indicated the producer group was unlikely to change output levels when it meets later this month.
The Organization of the Petroleum Exporting Countries, which supplies roughly 35 percent of the world’s crude, has held its quotas unchanged since last year’s record 4.2 million barrels per day in cuts.
“The price is perfect,” Saudi Oil Minister Ali Naimi told reporters. “The market is stable right now, volatility is at a minimum.”
Since December, OPEC has focused on boosting compliance with output quotas of its 12 member states. The group’s approach has helped oil prices rebound to almost $80 per barrel recently, after they collapsed last year as the world’s worst recession in decades sapped demand for crude. The benchmark crude oil contract for January delivery settled at $75.47 a barrel on Friday on the New York Mercantile Exchange, hitting a seven-week low on high global inventories and the strong dollar.
Ministers from several key Arab OPEC nations, however, indicated that they were satisfied with the current market situation and said it was unlikely the group would change quota levels at its Dec. 22 meeting in Luanda, Angola. “No, no, no, I don’t expect anything,” said Shukri Ghanem, the head of Libya’s National Oil Corp. who serves as the North African nation’s de facto oil minister. “I think because … of the market situation, because of the fluctuation of the market, we don’t expect any change in the quota.”
Kuwaiti oil minister Sheik Ahmed Al Abdullah Al Sabah said the group would likely hold its output targets “as is.”
Asked if he thought there was a consensus in the group on this point, he said: “I believe so.”
Sheik Ahmed said, however, he was dissatisfied with current compliance with production targets by some OPEC countries, stressing that level needed to be above 65 percent but was now near 60 percent. He did not say who was overproducing.
Algerian Oil Minister Chakib Khelil said that it would be some time before OPEC likely considered raising its production targets, signaling both an unease with global inventory levels as well as members’ current production target adherence.
Qatari Oil Minister Abdullah bin Hamad al-Attiyah said: “I don’t think … that OPEC will have any dramatic change. I think they will continue production as is.” All five officials spoke on the sidelines of the annual meeting of the Organization of Arab Petroleum Exporting Countries.
The producer bloc’s efforts to bring global crude stocks down have been somewhat undermined, however, by eroding compliance by some of its members, a slippage that has become more pronounced as oil prices climbed. The overwhelming majority of OPEC nations rely on oil revenues for as much as 90 percent of their foreign revenues, and higher prices have encouraged the more cash-strapped member-states to boost their output. Libya’s Ghanem said that he believed the group will “have to call for more compliance by OPEC members because there is some … excess production.”
An OPEC report last month said the group, excluding Iraq which is not bound by quotas, produced roughly 26.5 million barrels per day in October. That is about 1.5 million barrels per day above their production target.
Naimi voiced satisfaction with the current situation, however, saying that “inventories are coming down.”