SEOUL/NEW YORK – Global oil supplies are plentiful and demand is good, while buyers and sellers are happy with current prices, top exporter Saudi Oil Minister Ali Al-Naimi said Tuesday.
“You know my desire is that people leave the market alone,” he told Reuters in an interview in Seoul. “You know why? Because everybody now is happy with where the prices are. Nobody is complaining about high prices or low prices.”
“They are no longer skyrocketing or falling down. So I will really leave the market alone.”
The oil minister had identified $100 a barrel as a suitable price earlier in the year. Brent crude is currently trading above $108 per barrel.
Asked if he was concerned about next year’s demand growth because of the global economic uncertainty, Al-Naimi said: “Mechanisms are working well. Supply is plentiful, demand is good.”
On the supply front, he noted high US production along with a recovery in output from Iraq and Libya.
Last year, Saudi Arabia was pumping crude at an elevated rate, a step the Kingdom had initially taken to plug the supply gap left from this year’s disruption to Libyan oil exports.
“The Kingdom produced a special blend of crude similar to Libyan oil to compensate for the gap in Libyan oil production and to meet demand,” Al-Naimi told Al Arabiya in October 2011.
“In 2012, demand will increase to 1.1 million barrels, and will rise to 1.3 million barrels in 2013,” Al-Naimi had projected.
But OPEC will likely cut its oil production next year as prices risk falling in reaction to higher output from top crude consumer the United States and amid a slowing of energy demand growth, analysts say.
The Organization of Petroleum Exporting Countries (OPEC) decided Wednesday to hold its oil output ceiling at 30 million barrels per day, which stands about one mbd below the organization’s actual production.
At a ministerial meeting in Vienna – where OPEC is based – its 12-member countries also chose to re-appoint Secretary-General Abdullah El-Badri to head the group for another year after failing to agree on a new leader.
“When you look at the price now, there is not concern at this time,” El-Badri told reporters at a post-meeting press conference in the Austrian capital Thursday.
“I think the current price, at $110 (a barrel for benchmark Brent crude), is acceptable for both producers and consumers.”
OPEC said Wednesday that “the biggest challenge facing global oil markets in 2013 is uncertainty surrounding the global economy, with the fragility of the eurozone remaining a major concern.”
Oil prices rose Tuesday as hopes grew of a US deal to avert a “fiscal cliff” of tax hikes and spending cuts in the United States – the world’s biggest consumer of crude – analysts said.
New York’s main contract, light sweet crude for delivery in January, increased by 49 cents to $87.69 a barrel.
Brent North Sea crude for February advanced 58 cents to $108.22 per barrel in London midday deals.
“Crude oil prices rebounded on Tuesday amid hopes about the US budget details after the meeting between US President (Barack) Obama and House Speaker John Boehner provided some optimistic signs about the US economy, showing potential for a rebound in the US oil demand,” said Sucden brokers analyst Myrto Sokou.
Long-term oil demand prospects have not only been affected by the medium-term downward revisions, but by higher oil prices too, Opec said in its “World Oil Outlook” report 2012.
Additionally, the implications of technological developments and deployment, especially in the transportation sector, also contribute to some downward long-term revision.
In the reference case, demand increases by over 20 mb/d for the period 2010–2035, reaching 107.3 mb/d by 2035.
The long-term sees a steady decline in demand in all OECD regions. Fully 87 percent of the global demand increase is in developing Asia, where demand reaches 90 percent of that of the OECD by 2035.
Global demand in 2035 is more than 2 mb/d lower than in the WOO 2011.
Oil-related investments between 2011 and 2035 estimated in the range of $6 to $7 trillion In the period to 2035, global refining investments are estimated to be around $1.3 trillion, out of which $230 billion will be needed for existing projects, $300 billion for required additions and around $750 billion for maintenance and replacement.
The key components of the additional investments needed beyond the refinery gate – typically referred to as the midstream sector – relate to the necessary expansions in regional pipeline systems and tanker capacity that are required to move volumes of crude oil and liquid products. – SG/Agencies