Saudi oil minister backs 1M barrel production cut
OPEC minister voices support for move at cartel meeting, and hints that another cut may be necessary in December.
The minister was asked if a cut of more than a million may be necessary. "We will look at that in Abuja ...there is a big possibility there will be another reduction in Abuja," Naimi replied.
OPEC ministers meet on Thursday to finalize the organization's first output cut since 2004, aimed at halting a precipitous fall in prices and sending a message of intent to a skeptical world market.
OPEC is scheduled to meet Dec.14 in the Nigerian capital.
"Let me make the issue of price clear," Naimi told reporters. "You know the price is determined by the market. What we try to do is make the market in balance.
"Today there is dis-equilibrium between supply and demand - we are trying to bring back the market to normal equilibrium and the price will take care of itself," he added.
U.S. light crude jumped 72 cents to $58.37 a barrel, after plunging more than 2 percent the previous session.
Earlier Thursday OPEC President Edmund Daukoru said a 1 million bpd cut would be the "minimum outcome" of Thursday's meeting.
Naimi said OPEC will detail exactly the distribution of the cut among members to be decided Thursday. Saudi Arabia had already started cutting back its supplies to the market, Naimi said.
"We will publish the numbers exactly," Naimi said.
He said he expected Thursday's cut to be effective from Nov. 1.
There is agreement in OPEC it must reduce production by at least one million barrels daily, or 3.6 percent, to counter slowing demand for its oil next year and high fuel stocks, especially in top consumer the United States.
But it remained unclear where the group, which pumps more than a third of the world's oil, would apply the knife - to actual output, averaged over 3, 12 or 14 months, or quotas that have little relation to barrels pumped.
Iran and Venezuela, struggling to meet their quotas, are wary of a cut based on actual supply that would see them ceding market share to other producers, most notably Algeria, that are pumping way in excess of their official limits.
But most in OPEC say a reduction must come from real output to be credible, effectively scrubbing out existing quotas. Iranian Oil Minister Kazem Vaziri-Hamaneh told reporters on Thursday he would go along with the majority view.
To try to sidestep the issue of quotas OPEC may present the cuts as voluntary or temporary - releasing only a list of individual cutbacks, Qatar's Attiyah said.
A decision to remove more crude oil from oversupplied markets could fall at OPEC's next meeting in Nigeria on Dec. 14, the head of Libya's delegation Shokri Ghanem said.
"OPEC's task in Doha looks difficult. The group must provide the market with a credible scheme or prices may fall further," ABN AMRO analyst Geoff Pyne said.
Analyst John Hall of John Hall Associates said OPEC had missed a window of opportunity to rebalance the 85 million bpd world oil market and shore up prices at its September meeting.
"The difficulty they have is that it's too late to do anything. It's too late and not decisive enough," he said.
Another analyst said some OPEC policymakers wanted to make deeper cuts in output but felt hamstrung by mid-term elections in the United States, where fuel prices are a political issue.
"If it weren't for the U.S. election and the high prices we've had there would be a better than 50 percent chance that OPEC would cut more than a million barrels," he said.
OPEC's official ceiling has been at 28 million bpd since July 2005. During that time output has shifted around 500,000 bpd either side of the official limit.
No comments:
Post a Comment