Saudi Arabia's oil minister Ali al-Naimi.
Energy ministers from at least eight OPEC countries expect the group to keep its crude output target unchanged at a meeting today while Saudi Arabia’s Ali al-Naimi said the market is in the best possible condition.
The current 30 million barrel-a-day target for the 12-nation group adequately matches demand and is unlikely to change much in 2014, Suhail Mohammed Al Mazrouei, the oil minister for the United Arab Emirates, said shortly before closed-door talks began at about 10:30 a.m. local time in Vienna. Ministers from Qatar, Angola, Ecuador, Venezuela, Iraq, Algeria and Nigeria also said they expect the limit to be maintained.
Some analysts warn that excess supply, including U.S. shale oil and a potential resurgence in exports from Iran, Libya and Iraq, may push prices lower next year if production cuts aren’t made. Brent crude has settled above $100 a barrel for all but five days so far this year.
Al-Naimi said that 30 million isn’t too much for OPEC’s target. “No, no, is enough,” the Saudi minister said when asked about it. He later said “wait and see” when asked if the target would be rolled over today. He also said there’s no need for Saudi Arabia to cut its own production level. The kingdom is OPEC’s biggest oil exporter and produced 9.65 million barrels a day last month, according to a Bloomberg survey.
Brent crude, the benchmark used to price more than half of the world’s crude, was 45 cents lower at $112.17 a barrel as of 11:47 a.m. in London on the ICE Futures Europe exchange. It averaged $108.57 since the start of the year, compared with $111.68 in 2012 and $110.85 in 2011.
A press conference at OPEC’s Vienna headquarters is tentatively scheduled for 4 p.m. local time.
The Centre for Global Energy Studies in London and Citigroup Inc. in New York have forecast that Saudi Arabia and its allies Kuwait, Qatar and the U.A.E. would have to reduce production by one million to two million barrels a day in 2014 to prevent a glut and keep prices stable.
In the past two years, Saudi Arabia has adjusted its own production without any change to OPEC’s formal output cap.
“Considerable supply-side risks in OPEC” mean the group will probably need to cut output only by 600,000 barrels a day next year, which is within Saudi Arabia’s capability to do alone, according to Harry Tchilinguirian and Gareth Lewis- Davies, analysts at BNP Paribas SA.
“In addition to continuing problems in Nigeria, the planned incremental supply from Iraq may not emerge due to civil unrest, a recovery in Libyan output in the near-term is unlikely, Venezuelan political unrest is a concern and we believe the re-emergence of Iranian barrels remains some way off,” the BNP analysts said in an e-mailed report yesterday.
The U.S. is pumping the most in almost a quarter century amid surging production from shale formations. It will surpass Russia and Saudi Arabia to become the world’s largest oil producer for a few years from about 2015, the International Energy Agency said last month.
OPEC is also supposed to decide today who will replace Abdalla El-Badri as the group’s secretary-general. The Libyan official has served an extra 12 months after the group failed to select a successor among three candidates last December.
“Keeping el-Badri is a big possibility as we didn’t reach an agreement so far on current candidates and we don’t have new candidates,” the UAE minister Al Mazrouei said today.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the U.A.E. and Venezuela.