Any effort by Saudi Arabia to push for an increase in OPEC’s oil output target is likely to face resistance from some members, according to Angola, Africa’s second-largest producer.
Ecuador, Venezuela and Angola itself said oil markets are well supplied and that they see no reason to raise production. The group’s 12 members began meeting today in Vienna at 10:30 a.m. local time to decide on output limits.
“People are talking about an increase,” Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters yesterday in the Austrian capital. “We have to wait and see. My feeling is there is no need. The market is supplied at this time. There are some geopolitical problems.”
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s crude, will raise its official ceiling on output for the first time since September 2007, a Gulf delegate with knowledge of the matter said yesterday. Michael Wittner, the head of oil-market research at Societe Generale SA in New York, said yesterday that OPEC is likely to increase its target by as much as 1.5 million barrels a day. Morgan Stanley forecast an increase of 1.5 million barrels starting this summer.
U.S. crude for July delivery dropped as much as 99 cents to $98.10 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.26 at 11:27 a.m. in London. Prices have gained 36 percent over the past 12 months.
Analysts Foresee Increase
Venezuela considers $100 a barrel to be a “fair” price for oil, the country’s Energy Minister Rafael Ramirez said in Vienna before the meeting began. Venezuela’s President Hugo Chavez said yesterday on state television that he sees no need for a production increase.
Ecuador’s President Rafael Correa agrees. Correa, speaking in the Ecuadorean city of Salinas, said $100 is a “just” price for crude, according to comments broadcast yesterday on Venezuelan state television.
Iran, the group’s second-biggest producer after Saudi Arabia, has historically taken a hard line on oil prices, and its OPEC Governor Mohammad Ali Khatibi said on June 6 that his country would argue against raising output. “There is no need to increase production” at this time, Khatibi said, according to the Xinhua news agency yesterday.
Mohammad Aliabadi, Iran’s caretaker oil minister, told reporters today that his nation would go along with the majority of members on any decision about output. Iran holds the OPEC presidency this year.
Libyan Crude Missed
OPEC is meeting as fighting in Libya shuts off most of the output from Africa’s third-largest producer. A rebellion against Libyan leader Muammar Qaddafi has cut shipments from the North African country by almost 90 percent, according to Bloomberg estimates.
Saudi Arabia, with the bulk of OPEC’s spare production capacity, is the member best placed to increase output to help replace lost Libyan supplies and meet growth in demand later this year, said Bill Farren-Price, the chief executive officer of Winchester, U.K.-based consultants Petroleum Policy Intelligence.
“Saudi Arabia is well-positioned to take up a lot of that extra supply,” he said in Vienna. “However they actually package it within OPEC, there will be extra barrels in the second half.”
Saudi Price View
Saudi Oil Minister Ali Al-Naimi said as recently as Feb. 22 that an oil price between $70 and $80 a barrel would be “fair” for producers and consumers alike. He declined today to talk to reporters at the OPEC secretariat building.
OPEC last raised production targets in September 2007. The group announced its biggest-ever supply cuts in December 2008 amid a collapse in demand, capping production at 24.845 million barrels a day for all members except Iraq, which is exempt from the quota system. Members were 69 percent compliant with their limits in April, OPEC said in its most recent monthly report on May 12.
OPEC is now producing 2 million barrels a day more than its official ceiling, the Gulf delegate said, declining to be named because he isn’t authorized to speak publicly.
The group’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Angola is Africa’s second-biggest producer after Nigeria.