The Abu Dhabi National Oil Company (ADNOC) has told customers it will raise exports from two big offshore oilfields in December, signalling that the state oil giant intends to increase crude output before the next OPEC meeting. The move followed statements by the secretary general of OPEC, Abdulla el Badri, suggesting the group controlling 40 per cent of world oil supplies may sanction a loosening of the spigots at its December 22 meeting if oil prices remain strong.
It also coincided with gathering signs that global monetary and financial authorities are preparing to withdraw the emergency measures, including massive fiscal stimulus injections and rock-bottom interest rates, they implemented to keep the world economy afloat. Norway raised interest rates this week, citing the need to counter inflationary pressures as the economy recovers. Australia lifted rates earlier this month, the first developed economy to do so since the global credit crisis.
A rebound of about 80 per cent in oil prices this year to US$82 a barrel is among the factors contributing to renewed inflation. Economists have warned that a further rise in crude prices could tip the major economies back into recession. That is one factor that could lead OPEC to start rolling back the record 4.2 million barrels per day (bpd) of production cuts it pledged late last year, as crude tumbled from the record price of $147 per barrel reached the previous July.
Another is that the 11 OPEC members bound by quotas are increasingly unhappy about maintaining more than 6 million bpd of idled production capacity while some other big oil exporters, notably Russia, have been raising output to benefit from higher prices. The group's compliance with its production targets has been slipping since March. ADNOC, which provides the lion's share of the Abu Dhabi Government's revenues, said it would in December export two of its four major crude streams at 10 per cent below normal levels, and the remaining two at 15 per cent below normal. That compares with across-the-board 15 per cent production cuts it had promised for this month and next, and a 19 per cent cut last month.
Gulf oil producers including Saudi Arabia, the UAE and Kuwait, were among the few OPEC stalwarts that stuck closely to their quotas throughout the summer. Iran, Venezuela and Angola, which this year holds the rotating OPEC presidency, have exceeded their quotas the most. Iraq, the only OPEC member without a quota, has also raised oil exports this year as it seeks to boost revenue to repair its shattered economy.
So far, however, there is no clear consensus among OPEC members on raising output targets in December. Several ministers and Mr el Badri have said they would prefer to wait until swollen stockpiles have shrunk to normal levels. "If we see real shortage in the world, we will increase production to meet the shortage," Abdullah al Attiyah, the oil minister of Qatar, said on Tuesday after inaugurating a new liquefied natural gas production facility in the emirate.
On Thursday, crude dipped as low as $77.03, after nearing a 12-month high of $82 a barrel last week, following data showing petrol stocks in the world's biggest economy rose more than expected last week. @Email:tcarlisle@thenational.ae
