DOHA // OPEC needs total compliance to existing supply curbs before talking about a further reduction, Qatar's oil minister said. Ministers are due to hold a policy meeting on Sunday and some members have already called for deeper reductions to revive prices.
"We cannot discuss another cut until we see the compliance at 100 per cent," said Abdullah al Attiyah, the Qatari oil minister, at an industry conference in Doha. "The first step is to make sure we see full compliance." The comments echo signals from OPEC's most influential member, Saudi Arabia, that stricter compliance was needed and no new quota reductions were on the agenda yet. The Saudi-owned newspaper al-Hayat quoted a senior source as saying: "Saudi has informed the presidency of the organisation, which is Angola, that there must be... serious compliance with the latest reduction decision taken in December, which has prevented oil prices from falling further."
Saudi Arabia has already cut its output to below its quota to try to stem a slide in oil prices that has already knocked 70 per cent off the price of a barrel in eight months. Crude oil for April delivery rose US$1.19, or 2.5 per cent, to $48.26 a barrel in early trade on the New York Mercantile Exchange yesterday. Prices are up 8.2 per cent so far this year. Saudi Arabia's King Abdullah said last year that $75 a barrel was a "fair" price for oil.
Oil markets remain weak because of the worsening global economy and OPEC is concerned about the implications for future investment, said Jose Maria Botelho de Vasconcelos, the OPEC president. "The deep impact of the economic turmoil on the world oil market is evident with its continuing contraction, and it pressures the market with high oil stocks despite OPEC measures," he said. Even without a new round of cuts, OPEC has room to reduce output by another 800,000 barrels per day (bpd) to fully comply with its December pledge to remove 4.2 million bpd from world markets, said Abdullah el Badri, the OPEC secretary general.
The group had met 80 to 85 per cent of its pledged cut so far, but Mr el Badri warned that the economic crisis threatened to outpace those efforts and reduce prices further as world demand decreased. OPEC's latest forecasts say the world will use a million fewer barrels of oil a day this year as the economy slows. "We expect to see continuing downward pressure on prices," Mr el Badri said. "This highlights the importance of OPEC action."
The new demand forecast represents a downwards revision of more than 400,000 bpd, compared with last month. OPEC members are publicly divided over what course the group should take at Sunday's meeting. Iraq and Venezuela have indicated support for a new cut, while Gholamhossein Nozari, the Iranian oil minister, said last week no new cuts were likely. Iran has said exporters outside OPEC should be required to join any further efforts to stabilise world markets.
Qatar's emir, Sheikh Hamad bin Khalifa, told the Doha conference that prices must rise from current levels for producers to be able to afford investments in production capacity. Mohammed al Hamli, the UAE Minister for Energy, said last month prices must double from current levels of between $40 and $50 a barrel to support energy investments.
* with agencies and additional reporting by Chris Stanton and Tamsin Carlisle