x Abu Dhabi, UAEWednesday 17 January 2018

Opec’s oil output target likely to be unchanged

The energy group’s current production target of 30 million barrels per day is likely to remain unchanged, given the comments by Saudi Arabia and several members in the run-up to the meeting.

Saudia Arabia’s oil Ali Al Naimi said his country is satisfied with current oil output levels and prices. Alexander Klein / AFP
Saudia Arabia’s oil Ali Al Naimi said his country is satisfied with current oil output levels and prices. Alexander Klein / AFP

Opec is likely to keep oil production levels on hold at its 164th meeting today in Vienna as many members face internal output constraints.

The energy group’s current production target of 30 million barrels per day (bpd) is likely to remain unchanged, given comments by Saudi Arabia and several members in the run-up to the meeting.

Saudi Arabia’s oil minister, Ali Al Naimi, said on Monday that the kingdom was satisfied with current output levels and prices.

“Supply and demand are in equilibrium, inventories are in a good position,” he said. “We are at the right price right now … the price is market-decided. We’re happy with whatever the market determines.”

Mr Al Naimi’s comments were echoed by several energy ministers of Opec countries.

The UAE’s Minister of Energy, Suhail Al Mazrouei, tweeted yesterday that current market conditions were “balanced”.

Opec production has remained around the 30 million bpd mark, following production constraints in several oil-exporting nations including Iran, Iraq, Libya and Nigeria.

Iran’s oil exports have fallen to about 1 million bpd from 2.5 million bpd in 2011 because of international sanctions targeting its nuclear programme.

While Iran signed an interim agreement with six world powers last month, Iranian draft budget estimates for next year indicate that the country expects little increase in its oil exports in the coming year.

Tehran yesterday estimated that its oil exports would rise by just 100,000 bpd to 1.1 million bpd next year, according to a Reuters report.

Over in Iraq, the country currently exports about 2.3 million bpd, according to its oil ministry, with growth in the sector stifled by infrastructure and security constraints.

However, the country is bullish about its prospects for the new year.

The Iraqi oil minister Abdul Kareem Luaibi said yesterday that Iraq was planning to lift oil exports to 3.4 million bpd, including 400,000 bpd from the semi-autonomous Kurdish region.

While that plan is perhaps overly optimistic, the country is likely to experience a large uptick in production and exports during the year, according to Robin Mills, the head of consulting at Manaar Energy.

He said such an increase in Iraqi oil exports was likely to reignite the debate about quotas for individual Opec members.

“If Iraqi production requires a set quota, then every other member will need one as well,” said Mr Mills.

The scenario is likely to be exacerbated in the run-up to an expected cut in overall production target in 12 months’ time, as a rise in oil exports among non-Opec producers, especially the United States, puts pressure on prices.

“If Opec want to keep prices around their current levels they will have to trim production,” said Mr Mills.

The bulk of cuts was likely to be absorbed by Saudi Arabia, Opec’s largest member, with the UAE and Kuwait likely to follow suit, he said.

jeverington@thenational.ae