The Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada answers journalists’ questions before an Opec meeting in Vienna yesterday.
VIENNA: Opec oil exporters, basking in the market’s equilibrium, agreed to leave output policy unchanged yesterday as oil held around the group’s preferred level of $100 a barrel.
The Organisation of the Petroleum Exporting Countries will retain its 30 million barrels per day (b/d) production target for the rest of this year, said Venezuelan Oil Minister Rafael Ramirez, after a swift meeting at Opec headquarters. The group is due to gather again on December 4.
Saudi Arabia’s Oil Minister Ali bin Ibrahim Al Nuaimi had set the stage ahead of the meeting for an easy deal, saying world oil markets were in “good shape” and balanced. That may be the case for now. But Opec has little room to pump more oil due to the US oil boom that has sparked competition for market share in Asia and set off a rivalry between its top two producers Saudi Arabia and Iraq.
A year ago, Opec dismissed the threat of shale oil, but it’s now a live topic within the 12-member group. Gulf producers, led by Saudi Arabia, think that Opec will still be able to pump at least 30m b/d, provided US shale grows at a moderate pace.
“This is not the first time new sources of oil are discovered, don’t forget history,” said the influential Saudi oil minister. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”
Despite growing supply, oil is comfortably above $100 a barrel, well below the $125 that rang alarms in major consumer countries last year. But oil above $100 has also freed US shale oil in North Dakota and Texas — which competes with Opec crude of similar, light quality from Nigeria and Algeria, rather than heavier Saudi output.
Nigeria, along with Algeria, has already felt pressured by the US oil boom, losing ground in its most lucrative export market and diverting sales to Asia.
Iraq is also fighting for more Asian market share, competing with regional rival Saudi Arabia. But Iraq’s production and exports are not growing as swiftly as hoped due to myriad infrastructure and logistical hurdles. Oil Minister Abdul Kareem Luaibi expects the country’s oilfields to ramp up to about 3.5m b/d by the end of the year, up 400,000 b/d on current rates.
When Opec last met in December, he expected average production of 3.7m b/d for this year. The more modest growth has relieved concern among core Gulf producers that Baghdad would capture their market share in Asia. The group will choose its next secretary general when it meets again in December, said the minister.
Opec’s choice of a new secretary general has stalled on competing candidates from Iran, Iraq and Saudi Arabia. Yesterday’s meeting will merely approve the criteria for prospective candidates to come forward.
prices sink
Oil prices on both sides of the Atlantic extended sharp losses yesterday after a key Canadian crude pipeline resumed service, underscoring ballooning supplies in a market with tepid demand and a weak economic outlook.
TransCanada Corp said its 590,000 b/d Keystone pipeline, which delivers Alberta crude to Illinois and benchmark US supply point Cushing, Oklahoma, had restarted.
Brent crude futures dropped below $101 per barrel, trading as much as 1.5 percent lower at $100.70. The global oil benchmark was down $1.15 at $101.04 per barrel by 1549 GMT. US crude oil futures hit a low of $92.25 per barrel and were last trading down 96 cents at $92.65.
Supplies of oil are more than ample. US government data on Thursday showed crude stocks at a record high. Traders and investors are waiting to see whether the US Federal Reserve continues its monetary stimulus program, keeping interest rates low and supporting oil prices.
A stronger dollar also weighed on oil. The dollar index rose slightly, climbing from a near three-week low earlier this week. A stronger US currency makes dollar-denominated commodities more expensive for holders of other currencies.
Reuters
