KUWAIT CITY, 13 March 2005 — OPEC ministers who meet in Iran next week are likely to maintain the current output ceiling, OPEC President Sheikh Ahmad Fahd Al-Sabah said yesterday, stressing the organization would take measures to stabilize soaring oil prices. “I think we will continue with the same ceiling” of 27 million barrels per day (bpd), he told reporters when asked what he expected OPEC to do when it meets in the Iranian city of Isfahan on March 16. “We have to be very careful because there is still overproduction,” said Sheikh Ahmad, who is also Kuwait’s energy minister.
But he also said that the 11-nation cartel would “study the market situation with the aim to stabilize prices and market supply.” “I think if prices will continue like this, OPEC will behave like (it did) in 2004 and we will make sure we have to do something to stabilize prices,” he said.
“Until now, prices are still high and there are indications there is a little increase in demand especially from China ... (but) I don’t think there is a shortage in the market,” Sheikh Ahmad added. Another option OPEC will assess at its upcoming meeting is to sanction unofficial overproduction, the president said.
“OPEC will work to stabilize prices either by maintaining the ceiling or allowing overproduction to continue ... I believe that all are overproducing,” he said.
The Middle East Economic Survey (MEES) reported in its Feb. 28 edition that OPEC oil production rose by 150,000 bpd last month to 29.35 million bpd from 29.2 million bpd in January, according to MEES estimates.
Crude oil prices resumed their upward trend Friday after the International Energy Agency (IEA) predicted global demand in 2005 would be stronger than earlier forecasts. New York’s main contract, light sweet crude for delivery in April, gained 89 cents to $54.43 a barrel in closing deals. In London, the price of Brent North Sea crude oil for delivery in April added 44 cents to close at $53.10.
The IEA said it expects demand growth of 2.2 percent - or 1.8 million barrels per day - from its previous forecast of a 1.8 percent increase. The report said demand for oil in 2005 would be 330,000 bpd higher than expected because of cold weather, expected robust growth in the United States and consumption in China.
The OPEC chief said the organization had invited non-OPEC producers to attend the Isfahan meeting in a bid to jointly help calm the market. “It’s not the responsibility of OPEC alone. It should be a joint responsibility of OPEC and non-OPEC. All parties should cooperate,” he said.
Three non-OPEC countries have so far agreed to attend, added Sheikh Ahmad, who said he has initiated contacts with non-OPEC producers. “We have already started communicating with some non-OPEC members ... If they have the capacity ... and the market will need more production, I think we will discuss with them to increase their production,” he said. “We have to see exactly each (member’s) capacity ... and what will be the size of production OPEC with Iraq can” pump into the market, said Sheikh Ahmad. At present, he said, OPEC has a spare capacity of two million bpd.
