VIENNA, 29 January 2005 — With oil prices stubbornly high, OPEC was expected to keep oil production steady at current quota levels and refrain from a cut as the powerful 11-nation group was set to meet in Vienna tomorrow. The president of the Organization of Petroleum Exporting Countries, Kuwaiti Energy Minister Sheikh Ahmad Fahd Al-Sabah, told US television Thursday that the group would maintain current production levels of 27 million barrels per day (bpd).
Speaking to CNBC television from Davos, Switzerland, Fahd Al-Sabah said the OPEC ministers would agree to the “same ceiling without any cut”. “We are very keen about the stability of the prices in the market.”
The Kuwaiti minister said “all numbers show there’s adequate supply in market” but he pointed out that there was upward pressure on prices because of cold weather in the United States and elsewhere. Asked about how he saw prices evolving, the OPEC president said: “I think it will be almost in the range of what the price is now.”
Ali Naimi, oil minister for the world’s largest oil producer and key OPEC member Saudi Arabia, said the ministers could wait before taking a decision about production, in an article in yesterday’s Financial Times in London. The next OPEC meeting is scheduled for March.
Global markets have been nervous about a possible move by the cartel to limit production, which could push up prices even further. World oil prices dropped yesterday amid forecasts of milder weather in the US northeast, although traders remained nervous leading up to Iraq’s landmark election and the OPEC meeting, analysts said. New York’s main contract, light sweet crude for delivery in March fell 51 cents to $48.33 a barrel in electronic deals. In London, the price of Brent North Sea crude oil for delivery in March slid by 49 cents to $45.95 a barrel.
The meeting tomorrow is on the same day Iraqis go to the polls in historic elections amid threats of violence to disrupt the process. But an OPEC source in Vienna said the dates were a coincidence and that no sort of political statement was expected.
At Investec Securities of London, Bruce Evers commented to AFP by telephone that OPEC was meeting at the end of January in order to be ready to cut production by mid-March in time for warmer spring weather, and reduced demand for crude, in the Northern Hemisphere.
But Evers said that current price levels, driven by worry about Iraq and other global factors as well as continuing high demand from strong Asian economies such as China, meant there should be no production cut, or at most half a million barrels per day from the current 27 million bpd quota, as a symbolic gesture.
The United Arab Emirates said Wednesday that it would oppose any reduction in OPEC’s production ceiling. Energy Minister Mohammed bin Zaen Al-Hameli told the official WAM news agency: “Actual production by OPEC members, including Iraq, is currently around 29 million bpd (barrels per day). Meeting demand during the second quarter of 2005 will require real output of between 28 and 29 million bpd.”
Iranian Oil Minister Bijan Namdar Zanghaneh said on Monday that although OPEC believed the oil market was oversupplied, it was unlikely to decide on an output cut in Vienna. Zanghaneh said a decision on output would probably be deferred to the cartel’s next meeting in the Iranian city of Isfahan in March.
Oil expert Leo Drollas told AFP from London that OPEC “did not need to do anything really because prices have gone up since they thought of cutting further.”
