Majority in OPEC, including Saudis, favor $100/barrel oil
Dubai (Platts)--18Sep2012/747 am EDT/1147 GMT
Most members in OPEC, including Saudi Arabia, believe that the ideal
price for oil is around $100/barrel and would like to see current oil
prices fall further given a weak global economy, a senior Gulf official
said Tuesday.
"We think the oil market is balanced. There is no shortage," the source
told reporters on the sidelines of an energy conference in Dubai. "The
expectation is that for the next few months and next year even, there is
more non-OPEC oil coming."
At the same time, demand was expected to weaken given the current state
of the global economy, he added. Demand growth "will not exceed 800,000
b/d," the source said.
"We believe that the price is high and not supported by
fundamentals...we would like to see the price going down and Saudi
Arabia is working to bring it down," the senior Gulf source said.
OPEC kingpin Saudi Arabia is producing "around 10 million b/d and is
expected to continue to produce 10 million b/d" if there is demand from
its customers, he added.
"Oil at $100 seems the ideal price for the majority in OPEC," he said.
"The majority of OPEC countries prefer $100/barrel, including Saudi
Arabia."
The source also said that markets were balanced and commercial oil
stocks were "comfortable," with supply set to rise in coming months from
the US, Iraq and other non-OPEC oil producers.
OPEC kingpin Saudi Arabia sees no need to change its oil production
level at this time with prices at current levels and will continue to
supply its customers with their needs, the source said. "Absolutely
not," the source said when asked whether Saudi Arabia would cut supply
as oil prices have declined.
"Saudi Arabia wants to see oil prices fall even further," the source
said, adding that Riyadh was concerned about the impact of high oil
prices on the global economy. He was responding to Monday's dramatic
fall in oil futures prices to their lowest levels in four months.
At 1123 GMT, November ICE Brent crude futures were 23 cents lower at
$113.56/b while November NYMEX crude futures were at $96.56/b, down 39
cents from Monday's settle.
The remarks by the senior Gulf source follow a rare statement by Saudi
Arabian oil minister Ali Naimi pledging Saudi efforts to defend oil
market stability.
Naimi said in the September 10 statement that oil prices were not
supported by fundamentals and that inventories were more than adequate
to meet demand, remarks interpreted at the time as directed toward
Washington and talk of a possible release of oil stocks from the
Strategic Petroleum Reserve.
"Saudi Arabia will, as always, take all necessary steps to ensure the
market is well supplied and to help moderate prices and we will meet any
additional demand from our customers," Naimi said in his statement.
"We will continue to work in collaboration with other Gulf Cooperation
Council nations, and with OPEC to defend the stability of the oil
market." Saudi Arabia has total production capacity of 12.5 million b/d
and at current production levels, can bring on an additional 2.5 million
b/d if needed.
--Kate Dourian,
kate_dourian@platts.com
--Tamsin Carlisle,
tamsin_carlisle@platts.com
--Edited by Jonathan Dart,
jonathan_dart@platts.com
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