Saudi Arabia and its Gulf allies are expected to press for an increase in Opec oil supply at a policy meeting in Vienna tomorrow, in the face of opposition from Iran.
Saudi Arabia to lead push for oil rise at Opec meeting
VIENNA // Saudi Arabia and its Gulf allies are expected to press for an increase in Opec oil supply at a policy meeting in Vienna tomorrow, in the face of opposition from Iran.
Delegates from the 12-member group are scheduled to meet tomorrow at Opec's headquarters for the first time since political unrest began shaking the Middle East.
It is feared the recent regional problems, which have helped to force the price of Brent crude oil as high as US$127 a barrel, the nuclear disaster in Japan that began in March and debt crises across Europe are threatening to slow the pace of the global economic recovery.
With so much uncertainty about growth and the risk of further supply disruptions in parts of the Arab world, tomorrow's Opec meeting "could be the most important gathering of the decade", said Johannes Benigni, the managing director of JBC Energy in Vienna.
The International Energy Agency (IEA), which represents 28 energy importing companies, made a highly unusual call for an increase in Opec supply last month, even as many analysts and bankers were expecting Opec to sit on its hands.
Asked if Opec would increase supply, Ali al Naimi, the Saudi oil minister, said: "That depends. We have to wait and see the data. If there is a need for an increase, we would decide accordingly. If there is no need, we will not."
Opec's analysis, less bullish than most regarding the outlook for oil requirements, predicts the demand for Opec crude in the second half of this year will rise to 30.7 million barrels per day (bpd), almost 1 million bpd more than its members are now pumping.
Other Gulf delegates have been less guarded than Mr al Naimi, with some suggesting an increase of at least 1 million bpd is needed.
But Iran, where a political crisis ended the tenure of the oil minister last month, is holding out against any increase.
"There is no need to increase Opec production in the 159th meeting of this organisation," the state broadcaster Irib quoted Mohammad Ali Khatibi, the Opec governor, as saying, citing the Iranian oil ministry website Shana.
Opec pumped 29 million bpd in April.
The 11 members of Opec bound by quotas, Iraq is excluded, are already pumping 1.5 million bpd above their official total ceiling of 24.8 million bpd, eroding the relevance of the quota to market expectations about oil supplies. Iraqi crude production is also on the rise, recently hitting a post-Second Gulf War high of 2.5 million bpd, with widespread expectations of 2.7 million bpd of output being achieved by the end of this year.
In recent months, Saudi Arabia and other Gulf oil producers with spare capacity have been boosting their output in response to signals global oil demand would continue to rise, extending the dramatic recovery that took hold last year on the strength of strong Asian economic growth.