VIENNA – Saudi Arabia has called for an increase in the OPEC’s output target despite a recent fall in crude prices.
“Our analysis suggests that we will need a higher ceiling than currently exists,” Saudi Oil Minister Ali Al-Naimi said in an interview with the Gulf Oil Review ahead of a meeting of the Organization of the Petroleum Exporting Countries Thursday.
However, Iraq’s OPEC President, Abdul Kareem Luaibi, said there is a surplus in supplies from the 12-member group.
“It’s very clear there is a tremendous surplus that has led to this severe decline in prices in a very short time span,” Luaibi told reporters via a translator.
Brent crude has fallen about $28 a barrel since March to $100 a barrel, weighed down by slow economic growth and increased output from Saudi Arabia.
Saudi has lifted output sharply to 10 million barrels a day, a 30-year high, to prevent inflated fuel prices blocking global growth.
“Our actions have helped the oil price drop from $128 in March to about $100 today which has acted as a type of stimulus to the European and world economy,” said Naimi. He said OPEC would need to study an assessment from economists, who met at the group’s Vienna secretariat Monday to calculate how much OPEC crude is required to balance world supply and demand in the second half of the year.
OPEC delegates said the economists settled on a figure of 30.7 million bpd, higher than the existing official target of 30 million bpd but well short of current output of 31.8 million.
That would imply that even with a higher formal target, actual supply would need to drop to prevent a substantial build in inventories on the 90 million bpd world market during the remainder of the year.
International Energy Agency chief Maria van der Hoeven said Monday that she expected OPEC nations to decide to keep pumping higher volumes of crude oil when they meet later this week in Vienna.
“What they did, especially the Gulf producers in the past few months, is producing a lot of extra oil, bring it to the market, bringing more liquidity to the market and I think that is is a very intelligent and responsible approach,” van der Hoeven said on the sidelines of a news conference in Paris. “I can’t imagine that they’re going to stop it,” added van der Hoeven.
Brent July crude fell 56 cents to $98.91 a barrel by 1:39 p.m. EDT (1739 GMT), having slipped as low as $98.03 after reaching $102.21.
US July crude was down 50 cents at $83.60 a barrel. – Agencies