The Organisation of the Petroleum Exporting Countries (OPEC) is set to cut 500,000 barrels per day (bpd) from its daily production quota due to massive oversupply, according to a top official.
Kamal Al Harmi, former president of the retail arm of the Kuwait Petroleum Company and of Kuwait’s OPEC delegation, spoke to Arabian Business ahead of OPEC’s meeting in Abuja, Nigeria earlier this week. “The market is terribly oversupplied, we would actually prefer a 600,000 bpd to 800,000 bpd production cut,” he said.
The total cut of some two million bpd (an earlier cut of 1.2 million bpd was approved at OPEC’s last meeting in Doha in October) would be essential to keep prices at current level between US$62 to US$63 per barrel, Harmi said. “Without further cuts the price will dive below US$60 per barrel,” he added. “The new quota would start with effect from 3 January 2007. The weak dollar and its affect on oil imports (priced in US dollar) do not hurt the Gulf nations much," Harmi said. “Our main trading partner in goods and services is the US, so this matter does not affect us much,” he said. “Maybe some North African nations have more euro imports, but I would say in the Gulf there are still more US ones.”
The US has however urged the cartel not to make further cuts to its oil production. Samuel Bodman, US energy secretary asked OPEC member states to continue to “keep markets well-supplied.”
Data from the International Energy Agency showed stocks of the 30 members of OPEC at the end of September stood at 2.76 billion barrels — the highest in eight years.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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