Saudi oil minister: why cut production when demand is there?
Vienna (Platts)--2Dec2013/421 pm EST/2121 GMT
Saudi Arabian oil minister Ali Naimi gave an upbeat view of world oil
markets on his arrival in Vienna Monday for OPEC talks on Wednesday,
saying demand for oil was "great," that global economic growth was
improving and, indeed, that the market was in the best possible
situation.
Naimi, whose country is the world's biggest exporter of oil and which is
OPEC's de facto swing producer, was asked whether Saudi Arabia would
need to reduce production in the second half of next year because of
concerns about potential oversupply.
"I am not pessimistic about the market," Naimi said. "The market is
doing well for the past two years. Inventories are right-positioned. The
market is in the best situation it can be. Demand is great, economic
growth is improving, why do you want to be so pessimistic?" he said in
response.
Naimi was also asked specifically whether cuts would be needed to
accommodate increased exports from Iran in the event of sanctions being
lifted.
"Why cut production? Demand is there," he said. "I want you to go with
one message. Be an optimist. There is good economic growth, there is
good demand, the market is big, and everybody is going to supply what
they can to satisfy the demand."
Interrupting a question as to how Saudi Arabia would respond if Iran
were to resume exports at pre-sanctions levels, Naimi said:"'If,' 'if,'
'if.' Stay away from 'if.' No scenarios. 'If' doesn't do it." OPEC is
expected to maintain its current 30 million b/d crude output ceiling at
Wednesday's meeting, despite projections of reduced demand for its crude
below that level.
The International Energy Agency in its November oil market report said
it expected demand for OPEC crude, plus movements in and out of stocks,
to fall to just 29.1 million b/d in 2014 from 30 million b/d this year
as the shale boom in the US pushes non-OPEC production higher.
On a quarterly basis, the IEA sees the call on OPEC falling by 1 million
b/d between the fourth quarter of this year and the first quarter of
2014, from 29.6 million b/d to 28.6 million b/d, and remaining at a
similar level through the second quarter.
OPEC's November report has slightly more optimistic numbers, the call on
OPEC crude falling to 29.57 million b/d in 2014 from 29.88 million b/d
this year. On a quarterly basis, it sees the call falling from 30.41
million b/d in the fourth quarter of 2013 to 29.16 million b/d in the
first quarter of next year.
A Platts survey of OPEC and oil industry officials and analysts last
month estimated OPEC production at 29.93 million b/d in October.
--Staff reports,
newsdesk@platts.com
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