x Abu Dhabi, UAESunday 23 July 2017

Oil ministers seem happy to keep status quo in Doha

Opec members are converging on a no change policy on production

Opec may have abandoned its treasured system of output quotas, but with oil prices holding above US$100 a barrel, officials seem likely to leave things as they are at next week's ministerial meeting.

"Everyone is happy," declared Abdalla El Badri, the Opec secretary general, at the World Petroleum Congress in Doha, which opened its doors on Sunday.

The organisation's last meeting, held in June, ended in acrimony as its members were split between leaving production levels unchanged and increasing crude output in response to Libyan's civil war.

Saudi Arabia, the UAE and Kuwait increased their output to make up for the lost Libyan supply, in the face of opposition from Iran and Venezuela.

But Opec ministers were singing from the same song sheet in the Qatari capital at this week, hinting that no changes were necessary at the December 14 meeting.

Relatively high prices above $100 a barrel for Brent crude, substantially above the $75 target identified by Saudi Arabia, are counterbalanced by uncertainty over the global economy.

Jose Botelho de Vasconcelos, the Angolan oil minister, said quotas need not be discussed until Libya had reached its pre-war production of 1.6 million barrels per day (bpd).

"Once Libya reaches full production, hopefully by next year, then Opec members need to talk about quota," he said.

Opec's previous output ceiling for 11 members stood at 27 million barrels per day (bpd) until June, when the agreement was abandoned in favour of a free-for-all.

Most members are pumping at full tilt, with only Saudi Arabia holding a substantial spare-capacity cushion.

The Saudi minister, Ali Al Naimi, said yesterday the kingdom was producing 10 million bpd of crude and gas condensates leaving about 2.5 million bpd in reserve.

Libyan oil is coming back on-stream faster than expected after the civil war, according to Mr El Badri.

He said yesterday crude production could hit 1 million bpd by the end of the year, and reach its pre-war levels of 1.6 million bpd before next year ends.

Remaining Opec countries need not cut output to accommodate Libya's return, said Mohammad Al Busairi, Kuwait's oil minister, at the Congress.

His statements will be welcomed by oil importing countries, who fear a supply shortage will worsen economies in the euro zone and the US, and dampen strong Asian growth.

 

fneuhof@thenational.ae