VIENNA, 4 July — Saudi Oil Minister Ali Al-Naimi reaffirmed the Organization of Petroleum Exporting Countries’ objective of keeping crude prices around $25 a barrel, saying it would do whatever necessary to achieve that.
“The $25 is a fair price for both producers and consumers,” he said. “We have a target in mind, we have a band in place, we will take any action whenever necessary,” he said. He referred to a price-band mechanism set up by OPEC last year to keep prices between $22 and $))28 by automatically increasing or cutting production depending on price fluctuations.
“We have a mechanism, whatever the impact, whether a shortage or a glut,” he said, adding that there was “no way we will change our target range, no matter what, under no circumstances.” He was speaking at the start of a formal meeting of OPEC producers who agreed to keep oil output limits unchanged as expectations rose for an imminent resumption of Iraq’s UN-supervised crude exports.
The OPEC left output for 10 members at 24.2 million barrels a day, keeping in place the supply restrictions it set earlier this year. OPEC is struggling to defend prices at its $25 a barrel target ahead of the likely resumption of substantial Iraqi supplies and because of a global economic downturn that is eating into oil demand.
“We took account of the situation in the market which is well supplied. Stocks are at a very good level relative to last year,” said OPEC President Chakib Khelil.
Naimi said the cartel was prepared to rein in supply again if the return of Iraqi oil proved too much of a burden for prices.
“If Iraqi oil returns we may have to take steps to cut back,” said Naimi. “Demand is reflecting the slowdown in economic growth. It is not picking up in the East or the West.” London Brent blend eased 28 cents to $25.37 a barrel taking losses to more than $4 a barrel in the space of a month. Iraq is thought likely to lift a self-imposed block on its oil sales after a United Nations vote which looked set to renew existing measures against Baghdad, including an oil-for-food exchange.
Faced by the threat of a Russian veto, the US and Britain on Monday abandoned efforts aimed at overhauling the 11-year-old Gulf War embargo.
That would appear to meet Iraq’s conditions for a resumption of its two million barrels daily, although a draft resolution contained a reference to sanctions reforms. Baghdad stopped exports in early June in protest at the plans.
OPEC Secretary-General Ali Rodriguez said he did not know if or when Iraq could resume its crude exports, which it suspended last month.
