News & Current Affairs

September 9, 2008

Output issues loom as Opec meets

Output issues loom as Opec meets

Worker checks over oil pumps in Iran

Iran is leading the calls from those nations demanding an output cut

The United Arab Emirates'(UAE) delegation to Tuesday’s Opec oil meeting says the cartel will continue to keep the world “well supplied”.

Minister of Energy Mohammed Bin Dhaen Al-Hamli also said crude stockpiles in major oil consuming nations were within recent average levels.

It came as Iran led calls for Opec to cut output.

Analysts say the cartel may scale back production as prices have fallen from $147 a barrel in July to about $107.

Light, sweet crude rose 53 cents to $106.67 during trading on the New York Mercantile Exchange on Monday.

‘Market requirements’

The price hit a five-month low just above $105 on Friday, under pressure from economic weakness and lower fuel consumption.

However the Kuwaiti oil minister, Mohammad Olaim, backed the views of the UEA’s delegate Al-Hamli.

“We don’t think there is a requirement to decrease production,” he said before leaving for the meeting in Vienna.

“If the market requires anything to do, we will.”

Al-Hamli added in his remarks that decisions on production levels are based on whether the market is well supplied.

He also said the recent fall in prices showed that the earlier steep rise in prices from $100 a barrel at the turn of the year was “too high, too fast”.

But Iranian Oil Minister Gholam Hossein Nozari said on Monday that there was “oversupply” as he arrived for the 13-nation conference.

Increased output

On Sunday, Libya also called for a reduction in Opec output. Opec is currently thought to be producing about a million barrels per day (bpd) more than its official ceiling of 29.67 million bpd.

In May and June Saudi Arabia agreed to increase production by 500,000 bpd to help calm markets.

Saudi Arabian Oil Minister Ali al-Nuaimi has yet to state an opinion on output and prices ahead of the meeting.

Opec produces about 40% of world crude. In July, the exporters’ group said world demand for oil will grow by 50% between now and 2030 as people in developing countries drive more cars.

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