A SAUDI Arabian-backed proposal to temper high oil prices by raising oil output at yesterday’s OPEC meeting in Vienna is meeting resistance from Venezuela, Algeria and Libya.
Oil prices above US$77 a barrel are a burden to consuming nations, prompting some Persian Gulf producers to discuss a proposal to raise OPEC quotas by 500,000 barrels a day at the meeting at OPEC’s Vienna headquarters. The group’s biggest producer, Saudi Arabia, proposed an increase, Iraq’s oil minister said before the meeting started.
“We don’t support an increase as far as Algeria is concerned,” Algerian Oil Minister Chakib Khelil said yesterday. “Right now we don’t see sufficient evidence” to justify adding more supply to the market, he said.
Oil prices have risen 27 percent this year after members of the Organization of Petroleum Exporting Countries curbed exports to drain inventories. The world’s biggest oil companies, Exxon Mobil Corp and Royal Dutch Shell Plc, are profiting from high prices and bumper revenue are encouraging producing nations such as Russia, Kazakhstan and Venezuela to take greater control of their energy resources.
Crude oil for October delivery was eight cents down at US$77.41 a barrel on the New York Mercantile Exchange at 12:55pm Vienna time. Oil ministers from OPEC’s 12 member nations are gathered at the group’s Vienna headquarters for closed-door talks.
Saudi Oil Minister Ali al-Naimi has declined to comment to reporters in Vienna on production targets. OPEC President Mohamed al-Hamli, who is also oil minister for the United Arab Emirates, also declined to comment. Iraqi Oil Minister Hussain al-Shahristani said Saudi Arabia wants more oil in the market, though he added that a final decision would need to be made by consensus.
“There will be a need to increase supply sometime in the fourth quarter,” Roger Diwan, director of oil market research at Washington-based consultancy PFC Energy said in an interview in Vienna yesterday. “I think they will decide today (yesterday) to have a small increase and then signal that they would do more if needed later on.”
OPEC ministers were said to agree yesterday to increase oil production by 500,000 barrels a day and later further increase supplies depending on the winter demand, Diwan said. All 23 oil traders and analysts in a Bloomberg News survey last week said they expect OPEC to leave its collective target unchanged.
OPEC members already pump more than their quotas allow. The 10 members with quotas produced 26.71 million barrels a day last month, or about 900,000 barrels a day more than targeted, according to Bloomberg estimates. The 10 members agreed at two meetings late last year to cut a total of 1.7 million barrels a day.
Venezuelan Oil Minister Rafael Ramirez told reporters that OPEC has no need to change production quotas, while his Qatari counterpart Abdulla bin Hamad al-Attiyah said OPEC has “a lot of options” at its meeting.
Shokri Ghanem, chairman of Libya’s state-run National Oil Corp, said his nation will support a supply increase later in the year.
