OPEC unmoved as oil climbs to new two-year high
By Margaret McQuaile and Kate Dourian
February 17, 2011 - A wave of anti-government protests in several Middle
East countries has driven crude prices to their highest levels in more
than two years, North Sea Brent climbing above $104/barrel this week.
But, despite the fact that prices have risen by some $14/b since its
early December meeting in Ecuador, OPEC has given no indication that it
is concerned about the upward trajectory. Indeed, it insists that the
climb has little to do with fundamentals of supply and demand.
The oil producer club has scheduled its next ordinary conference for
June and several top officials and ministers have said in recent weeks
that they see no need for an extraordinary meeting and that oil markets
are well supplied.
But, as the group's history of quota-busting shows, OPEC does not need a
formal agreement to pump more oil and output has been climbing alongside
the rising prices.
A Platts survey of OPEC and oil industry officials and analysts
earlier this month estimated that production from the 11 members bound
by quotas -- Iraq does not have one -- exceeded the nominal 24.845
million b/d target by more than 2 million b/d.
Earlier this week, UAE oil minister Mohammed bin Dhaen al-Hamli defended
defended OPEC against accusations that it tailored production in order
to "fix prices," saying its role was to keep markets supplied with the
oil that they needed and noting that members often stepped in to shield
the market from imbalances.
"...ministers focus on coordinating production to ensure that the right
amount of oil reaches consumers. It is a myth that OPEC just wants to
reduce production in order to raise prices," he said.
"Often, members step in to shield the market from the impact of global
emergencies or geopolitical tensions such as the two Gulf wars and the
strike that paralyzed oil production in Venezuela in 2001," he added.
Hamli's reference to "members" rather than the 12-member organization as
a whole stepping in to meet supply shortages may not be insignificant
given the apparent increases in production by several OPEC producers,
including group kingpin Saudi Arabia and its Gulf Cooperation Council
allies the UAE and Kuwait, above their allocated output targets.
The February 22 ministerial meeting of the International Energy Forum, a
Riyadh-based talking shop for oil producing and consuming countries,
will provide an opportunity for those OPEC ministers attending the event
to discuss the market situation informally.
It seems unlikely, however, that the Saudi hosts will be keen to allow
OPEC issues to draw too much attention away from the main purpose of the
meeting, the signing of the IEF Charter.
Arab sources in OPEC say that matters are complicated by Iran's current
presidency of the cartel. Iran, the group's second largest exporter, is
a traditional price hawk and has made clear it is not worried by the
recent spike in oil prices.
OPEC president and Iranian oil minister Masoud Mirkazemi has said that
there will be no need for OPEC to meet even if prices rise to $120/b.
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