OPEC appears set to maintain its oil output ceiling later on Wednesday after cartel kingpin Saudi Arabia signalled no change and added that crude prices were “comfortable” for producers and consumers.
The Organization of Petroleum Exporting Countries, whose dozen members pump out about one third of the world’s oil, has held its daily production ceiling at 30 million barrels since late 2011.
Saudi Oil Minister Ali al-Naimi said the market was “stable and balanced” and that he therefore believed there would not be any decision to alter output.
The cartel’s biggest producer indicated that OPEC nations were pleased with current oil price levels, which have jumped 10 percent since December on supply tensions arising from Iran, Libya and Ukraine.
“The price is at a comfortable level for producer and consumer countries as well as for the oil industry,” added Naimi on the eve of the meeting.
He joined oil ministers from fellow OPEC members Angola, Ecuador, Iraq, Kuwait, Libya and Venezuela in hinting at no change to the ceiling being made at Wednesday’s gathering.
European benchmark Brent oil hovered close to $110 per barrel on Tuesday.
“The price… is not bad. It’s alright. The market, it’s okay,” Angolan Oil Minister Jose Maria Botelho de Vasconcelos said.
– Tensions boost markets –
Global oil prices have held above $100 a barrel this year, boosted by falling production from Libya, while Iran’s output remains hit by Western sanctions over its disputed nuclear programme.
Crude futures have also won solid support from the Ukraine-Russia crisis, which has stoked worries of an all-out civil war that could disrupt energy supplies and send the market surging.
While higher oil prices boost the coffers of producers in the short term, they can weigh heavily on economic growth, dampening demand and resulting in price weakness further down the line.
The International Energy Agency, which advises countries on energy policy, recently called upon OPEC to raise production sharply to keep oil markets well supplied because of record-high global demand.
The Paris-based IEA watchdog also warned last month that “crude prices remain elevated”, adding that signs indicated there should be “a significant rise in OPEC production from current levels in the second half of the year.”
Ongoing Libyan output disruptions mean there is no pressure on other OPEC members to curb production, analysts say.
Libya’s acting oil minister Omar al-Shakmak told reporters in Vienna that production was currently “less than 200,000” barrels per day, compared with its full capacity of 1.5 million.
Capital Economics analyst Tom Pugh said: “The focus (of the meeting) … is likely to be on the situation in Libya and how the group will meet any increase in demand in the third quarter.
“The cartel is unlikely to make any changes to its production target, given that it is more than happy with oil prices at current levels of around $110 per barrel.”
In a separate development, Iraqi Oil Minister Abdelkarim al-Luaybi revealed that Nigeria had nominated its oil minister, Diezani Alison-Madueke, to succeed OPEC’s long-standing Libyan secretary general Abdullah El-Badri. A vote was not due until December, while Nigeria has yet to comment.
Alison-Madueke was appointed Nigerian oil minister in April 2010 by President Goodluck Jonathan, but her tenure has been tainted by corruption allegations at home, which she has denied.