Venezuela urges cut in oil production
OPEC has no obvious reason to cut its oil output, the group’s president said today, even though Iran and Venezuela have cited excess supply in pushing for a reduction.
Edmund Daukoru, who is also Nigeria’s oil minister, told reporters that he didn’t see any reason why the members would vote for a cut at tomorrow’s meeting - echoing earlier sentiment from Saudi Oil Minister Ali Naimi, one of OPEC’s most influential voices.
“I don’t see any compelling reason for a cut,” Daukoru said. “The market hasn’t changed; the price is still $67 a barrel.”
There had been worries that Iran – under international pressure over its nuclear programme – would use the meeting as a forum for its grievances. But comments from Iran’s oil minister that OPEC would make any decision in a collective manner seemed to allay those fears.
Kazem Vaziri Hamaneh said today that the Organisation of Petroleum Exporting countries would “look at the conditions of the market and decide collectively”.
Iran has said in recent weeks that a build-up of excess supply is reason enough to cut production.
Venezuela, which consistently argues in favour of defending high oil prices, has said it would support such a move.
“The market looks well supplied, in fact oversupplied, by two million barrels a day,” Rafael Ramirez, Venezuela’s Minister of Energy and Petroleum said today. “We believe OPEC has to be ready to cut, maybe now in this meeting, maybe at the next meeting.”
He said OPEC should reduce its supply by as much as one million barrels a day.
But other members, including Algeria, the United Arab Emirates and Saudi Arabia – the world’s largest oil producer – are firmly against reducing the quota of 28 million barrels a day.
UAE energy minister Mohammed al-Hamili said today that output and prices would remain where they are.
“More likely than not we will roll over” the quotas, al-Hamili told reporters. “It’s going to be an easy meeting.”
Naimi had said yesterday that the group had no reason to reduce output now. “Absolutely not,” he said, when asked about a possible cut.
Algerian Oil Minister Chakib Khelil said on Saturday that the group would maintain its current quota.
“There is a consensus with the member countries to maintain the current quota as there is enough oil in the market,” Khelil said. He said he expected the price of oil to fall to around $50 in the second quarter.
Libyan Oil Minister Fathi Hamed Ben Shatwan said OPEC didn’t need to cut its oil output now, but needs to monitor prices heading into the second quarter.
“Libya feels that the oil price cannot fall below $50 a barrel,” he told Dow Jones Newswires.
Iran, OPEC’s second-largest oil producer, could use the meeting to withhold all or part of its 2.4 million barrels a day of exports as a response to criticism over its nuclear ambitions.
The nation insists the programme is aimed at generating electricity, while the US and some European nations fear it could be used to develop nuclear weapons. The International Atomic Energy Agency is to meet to discuss Iran on Thursday.
But Iran’s call for cuts is unlikely to be successful, said John Waterlow of Wood Mackenzie Consultants in Edinburgh, Scotland.
“Even if Iran does intend there should be a cut, other members wouldn’t agree to that,” he said, adding that OPEC members wouldn’t look kindly upon any political grandstanding.
Even though supply has outpaced demand in recent weeks and allowed global oil inventories to build, US crude oil futures are again near record levels.
Light, sweet crude for March delivery fell 13 cents to $67.63 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. March Brent crude on London’s ICE Futures exchange fell 39 cents to $65.85 a barrel.
Besides Iran, worries include instability in Nigeria, the world’s eighth-largest oil producer.
Attacks on platforms and pipelines in the oil-rich Niger Delta over the past month have killed dozens of soldiers and civilians and cut 10% of the nation’s daily oil output.
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