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Tue 11 Sep 2012 06:23 PM

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Gulf OPEC producers keen to see $100 oil

Exporters say they would like to see oil price drop as they fear long-term demand decline

Gulf OPEC producers keen to see $100 oil
(Photo for illustrative purposes only)

Gulf OPEC producers would like to see oil prices fall to around $100 a barrel because they fear current high prices could hit longer-term demand, Gulf OPEC delegates said on Tuesday.

Since OPEC ministers last met in June, Brent crude oil prices have surged about 20 percent and have hovered around $112-$117 a barrel since mid-August despite fragile economic growth in many consuming countries.

"A price above $100 can harm the global economy and is not good news," said one Gulf OPEC delegate, adding "so prices need to come down to around $100 a barrel."

Saudi Arabia's Oil Minister Ali al-Naimi said on Monday he was worried about high oil prices and that the top oil exporter would try to moderate them.

Lower supplies from Iran because of sanctions and outages in the North Sea have driven up crude prices in the last few weeks despite fears that Europe's deep economic problems might weigh on industrial activity and demand in Asia.

Gulf OPEC price doves - Saudi Arabia, the United Arab Emirates and Kuwait - have long feared that very high oil prices could reduce demand for their main export product by slowing economic growth and driving consumers to look for alternatives.

"It's agreed that the current price is too high and I believe that a price of around $100 is fair for consumers and producers," said a second Gulf OPEC delegate.

The remarks echo comments in May by Naimi that a price of around $100 a barrel would be "great" for Saudi Arabia.

In contrast, OPEC price hawk Iran, which needs high oil prices to compensate for lower sales volumes under Western sanctions, said on Monday oil prices were still too low.

Iranian Oil Minister Rostam Qasemi said oil prices will still increase in the coming months due to lower oil output from North Sea oilfields in Europe.

Qasemi's comments highlight the rift between Iran and Gulf producers who have increased their production this year to help make up for lower exports from Iran due to tightening Western sanctions over Tehran's disputed nuclear programme.

Although Saudi crude supply to the market remained steady at 9.8 million barrels per day (bpd) in July and August, off multi-decade highs of over 10 million earlier in the year, the big three Gulf OPEC producers collectively increased supply by around 400,000 bpd thanks to a 600,000 bpd jump in Kuwaiti production to 3 million bpd.

US administration officials met energy analysts at the end of last week in a meeting interpreted by some as a sign that President Barack Obama was considering tapping US government oil supplies in a bid to bring down fuel prices.

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