Arab oil exporters say market is well supplied; do not expect OPEC to raise output in 2011
The global economy can withstand an oil price of $100 a barrel, Kuwait's oil
minister said on Saturday, as other exporters indicated OPEC may decide against
increasing output through 2011 as the market was well supplied.
Analysts have said oil producing countries are likely to raise output after
crude rallied more than 30 percent from a low in May because they fear prices
could damage economic growth in fuel importing countries.
European benchmark ICE Brent crude for February closed at $93.46 on Friday
after hitting $94.74 a barrel, its highest level since October 2008.
Arab oil exporters meeting in Cairo this weekend said they saw no need to
supply more crude as stocks were high and prices had been inflated temporarily
by cold weather in Europe.
Asked by Reuters if the world economy could stand a $100 oil price, Kuwaiti oil
minister Sheikh Ahmad Al Abdullah al-Sabah said: "Yes it can".
Iraq's new oil minister and the head of Libya's National Oil Corporation
both told Reuters that $100 was a fair price, while Qatar's Minister Abdullah
Al Attiyah said he did not expect OPEC to increase production in 2011.
"I do not expect an OPEC meeting before June because oil prices are
stable," he said.
Some delegates even called for exporters to comply better with agreed
production limits. OPEC members' compliance with promised cutbacks reached 56
percent in November, according to Reuters estimates.
When asked if output could be raised, Kuwait's Sheikh Ahmad said: "No.
More compliance, more compliance".
The Cairo meeting of the Organization of Arab Petroleum Exporting Countries
(OAPEC) brought together Arab members of OPEC including top exporter Saudi
Arabia, which has traditionally been viewed as a price moderate, as well as
non-OPEC countries Tunisia, Egypt, Syria and Bahrain.
OPEC cut output drastically after the global financial crisis struck in 2008
to prop up collapsing oil prices.
As demand has risen steeply in 2010 and is expected to rise further in 2011,
the market is watching closely whether OPEC can release at least some of its
spare capacity to prevent prices from soaring to around $150 per barrel as they
did before the crisis struck in summer 2008.
OPEC's most influential oil minister, Saudi Arabia's Ali Al Naimi, said on
Friday he was still happy with an oil price of $70-80 a barrel and there was no
need for an extra OPEC meeting before the next scheduled one in June.
Others in the group have been pressing for a higher price, arguing that
quantitive easing and a weakened US dollar that spurred gains across financial
markets mean the oil price strength is partly nominal.
Egyptian oil minister Sameh Fahmy said the current increase in oil prices
was the result of higher demand on heating fuel because of the cold weather in
United Arab Emirates oil minister Mohammed Al Hamli said crude oil
inventories are "quite high. It's the highest over the five years
average... The market is well supplied".