OPEC: No Need To Raise Oil Output
Iran's acting oil minister said Monday he's convinced there are ample supplies of crude on world markets, joining Kuwait and Libya in signaling that OPEC will maintain its current output targets at this week's meeting.
Arriving in Vienna on the eve of a meeting that analysts said was unlikely to result in higher production quotas for the Organization of Petroleum Exporting Countries, Gholam Hossein Nozari suggested the 12-nation cartel felt little pressure to loosen its taps.
With the summer driving season over, and demand for gasoline and diesel fuel slackening, OPEC was almost certain to maintain its official output quota of 25.8 million barrels a day.
"There is enough crude in the market," Nozari, former head of the state-owned National Iranian Oil Co., told reporters.
Kuwait's acting oil minister, Mohammed Abdullah Al-Aleem, also said he believes there is plenty of oil to meet world demand and no compelling reason to boost production at Tuesday's meeting - echoing earlier comments by Libya and OPEC's secretary general, Abdalla Salem El-Badri.
"There are no strong justifications for an output increase," Al-Aleem said in a statement Sunday, adding that he felt global markets were "very close to stability."
But analysts said that could change quickly if prices already hovering around $75 a barrel edge much higher, or if supplies tighten with the approach of winter in the Northern Hemisphere.
Light, sweet crude for October delivery lost 62 cents to $76.08 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Europe. October Brent crude fell 53 cents to $74.54 a barrel on the ICE Futures exchange in London.
"OPEC faces a real dilemma," said John Kingston, global director of oil at Platts, the energy research arm of McGraw-Hill.
Kingston said the cartel, which produces about 40 percent of the world's crude, must balance projections of a tight market in the next few months against concerns about the crisis in the U.S. subprime mortgage industry and worries "that a significant slowdown in demand could be around the corner."
Subprime mortgage lenders have cut loans to prospective U.S. home buyers, feeding a housing slump that has stoked fears among energy investors of a wider economic slowdown and reduced demand for oil and gasoline.
The Paris-based International Energy Agency has urged the group to raise crude output, arguing that global demand is likely to outstrip supply with the approach of winter in the Northern Hemisphere.
Al-Aleem said the cartel would be discussing "all indicators that concern the international oil market.
OPEC already is quietly pumping over its official output target, Platts said in a survey released Friday.
Production by the 10 cartel members that adhere to the quota "has been steadily creeping up over the summer" and is now about 1 million barrels a day over, it said. Other estimates suggest the 10, which exclude Angola and Iraq, are pumping closer to 30.3 million barrels a day.
Analysts said an increase could come before the next OPEC meeting Dec. 5 in the United Arab Emirates if crude prices move closer to $80 a barrel, winter comes cold and early or a hurricane knocks out a key refinery in the Gulf of Mexico.
Crude hit a record $78.77 a barrel in early August on the Nymex. Many market-watchers see $80 as the new threshold.
"$80 is the mark they'll be looking at," said Eshan Ul-Haq, chief analyst at PVM Oil Associates in Vienna.
John Hall, of London-based John Hall Associates, said he thinks prices are US$15 higher than they ought to be.
OPEC, he contends, is being "a little bit greedy."
The 12 OPEC members are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
By Associated Press Writer William J. Kole