Tags: OPEC | Oil | Target

OPEC Seeks to Heal Rift and Fix Oil Target

Monday, 12 Dec 2011 01:20 PM

OPEC began negotiations on Monday on a new production deal aimed at healing the rift caused by a bad-tempered failure to agree an output target when it last met in June.

At stake for the Organization of the Petroleum Exporting Countries at its Wednesday meeting is a credible output policy heading into a year when sluggish global economy could undermine fuel demand and bring down oil prices that now are over $107 a barrel.

"I think they have to agree this time because they need to be credible," said former Algerian Oil Minister Chakib Khelil ahead of the meeting of the 12-member cartel that pumps more than half the world's oil exports.

Without a collective supply target, OPEC members with spare capacity - Saudi Arabia and its Gulf Arab allies - will remain free to pump at will.

Leading producer Saudi Arabia made clear its intention to keep oil prices under control, saying last week it was producing a surprisingly high 10 million barrels daily of crude, much more than estimated by most in the oil industry.

That pleased consumer nations worried about the impact of oil prices on global growth.

"OECD stock levels are at historically low levels, plus we are in very fragile economic recovery situation," said Fatih Birol, chief economist at the International Energy Agency.

But the Saudi position is worrying for the price hawks in OPEC like Iran, Algeria and Venezuela who want to keep oil above $100.

Iran wants a commitment from Saudi Arabia and other Gulf OPEC producers that they cut back to accommodate the restoration of Libyan supply.

"Should OPEC's present output continue, with the increased production of Libya and Iraq next year we would witness an increase in stockpiling and a drop in crude oil prices," said Iran's OPEC representative Mohammad Ali Khatibi.

OPEC experts met on Monday to discuss a recommendation to oil ministers on a production target for the first half of the year.

A delegate from a Gulf producer said the meeting would consider an output requirement of about 30 million barrels daily, near existing actual supplies from the 12 member group.

"30 million is the number we're looking at, yes," said one OPEC delegate ahead of the meeting.

Iran may push for a lower number of about 29 million bpd, an Iranian delegate said, arguing that supply now is too high.

OPEC's secretariat has prepared a report for the meeting which forecasts demand for OPEC crude at 30 million bpd on average in the first half.

That would allow for stocks to rebuild in the second quarter when global fuel demand is at its lowest. Inventories currently among OECD countries are at about 55 days of forward demand compared to 61 days in the spring.

Not allowing for stock changes, the secretariat sees demand for OPEC crude at 29.9 million bpd in the first quarter and 28.7 million bpd in the second quarter.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Markets
OPEC began negotiations on Monday on a new production deal aimed at healing the rift caused by a bad-tempered failure to agree an output target when it last met in June. At stake for the Organization of the Petroleum Exporting Countries at its Wednesday meeting is a...
OPEC,Oil,Target
485
2011-20-12
Monday, 12 Dec 2011 01:20 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved