Kuwait supports maintaining current OPEC production: minister

Kuwait City (Platts)--6Mar2006

Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah said Monday that he
supported maintaining the current OPEC ceiling because the oil price was too
high.
    "Kuwait's position is to maintain with the [same] production of OPEC just
to help the prices to be more stable," he told reporters in parliament.
     "I believe, because of the price, we have to maintain our production.
There is oversupply for the second quarter. But I believe still the prices are
very high. For that, we have to help price become more stable," he said.
     OPEC ministers are meeting in Vienna March 8 to determine output policy
for the second quarter of the year amid indications that the producers' club
was likely to keep its ceiling unchanged at 28 million b/d.
     Asked whether a price of $60/barrel for US light sweet crude oil futures
was too high, Sheikh Ahmed said: "Yes. And this is the price we're dealing
with for two years and this is still the behavior of the prices. It is not
related any more to demand and supply and for that, although, we are a
production organization, but also we have to help the other partner in the
market to stabilize the prices."
     Sheikh Ahmed was asked if he believed the market was oversupplied. He
replied: "In the second quarter it should be [oversupplied] by between 1.5 to
2 million barrels per day."
     On where he saw the price going if OPEC opted to maintain its ceiling, he
said: "I believe in the second quarter, if OPEC maintains production levels,
prices will decrease...unless there are more geopolitical tensions."
     Earlier, Saudi Arabian oil minister Ali Naimi was quoted as saying it
would be wrong for OPEC to adopt any decision on output that would raise oil
prices further and that he believed the group should not cut its production
although he was willing to listen to arguments to the contrary in Vienna.
     Naimi, speaking in an interview with the Saudi-owned newspaper al-Hayat
on the eve of his departure for Vienna, also ruled out an extraordinary
meeting ahead of the next scheduled conference in June.
     The newspaper quoted him as saying that OPEC "should not adopt any
measure that would raise prices." He added that any decision to do so would
lead to a price increase on markets concerned about security of supply.
     "There are causes in the market currently that are putting upward not
downward pressure on prices. We have noticed that each time the price falls
below $60 per barrel, it goes back up again because of several factors that
are affecting market stability so that any event in producing countries
influences the price," he said.
     The current price rise was due to "fears of a supply disruption and I
personally think that it would be wrong for OPEC to adopt measures to cut
supply," Naimi said. He added that he was ready to listen to counter arguments
by some members who have called for a production cut.
     But Naimi said cutting production with prices at current levels "would
send the wrong signal to markets and hurt the producing nations."
     The Saudi minister said that what had pushed prices higher was
"instability and political uncertainty in some producing nations," referring
to disruption to supply in Nigeria, the situation in Iraq, Iran and Venezuela
and the "failed" attempt to attack an oil installation in Saudi Arabia.
     "As for market fundamentals, they are stable in terms of supply and there
is no danger but the market view is that supply is threatened."

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