Kuwait hopes oil prices will rebound in the next two or three weeks and “settle” at a level favourable to producers and consumers, Oil Minister Mohammad Al Busairy said.
“It’s very difficult to discuss the price in this situation. We hope the price will recover within two or three weeks from now, but we don’t know,” Al Busairy said in a phone interview on Monday from Kuwait City. “There’s no guarantee about the situation in the States and Europe, and debt in Italy or Spain.”
Oil fell in New York after Standard & Poor’s lowered the US credit rating from the highest level, stoking concern an economic slowdown will worsen and cut fuel demand in the world’s biggest crude consumer. Crude for September delivery fell as much as $3.70 to $83.18 a barrel on the New York Mercantile Exchange and was at $84.44 at 9:39 am London time. The contract slipped to $82.87 on August 25, the lowest intraday price since November 26. Prices declined 9.2 percent last week, the most in three months, and are down 7.6 percent so far this year.
Kuwait would like to see oil prices “settle” to a level suitable for both consumers and producers, the minister said. “This is the good price for both of us,” he added.
Kuwait, the fourth-biggest producer along with the UAE in the Organisation of Petroleum Exporting Countries, produced 2.65 million to 2.7 million barrels a day in July and reached a “ceiling” of about 2.8 million barrels “sometimes” last month, Al Busairy said. The minister forecast output of 2.7 million to 2.8 million barrels a day in August.
The country is capable of producing at a rate of 3.050 million barrels day, Al Busairy said, “but we don’t want to reach that amount until we need this figure” and until there is demand on the market.
The Supreme Petroleum Council, the emirate’s highest decision-making body for oil policy, approved construction in June of a 615,000 barrel-a-day refinery to help meet domestic fuel demand. The council also approved plans to upgrade two of the country’s three existing refineries so that they can produce cleaner-burning fuels. Kuwait will spend about KD9bn ($33bn) on both projects, Al Busairy said on Monday.
“The whole amount will be spent over two to three years from the end of this year,” he said.
The projects are currently being supervised and monitored by the state Audit Bureau, he said. “We have to give them all the details in advance, to follow it,” to ensure all procedures are correct, the minister said.