OPEC oil output expected to decline as Libya recovers
DUBAI: OPEC producers that raised oil output to compensate for the shutdown of Libyan oilfields will certainly reduce production as the North African country’s output recovers, OPEC secretary-general Abdullah al-Badri said Monday.
Saudi Arabia and its Gulf OPEC allies raised their oil production in June after failing to convince other members to agree on an increase in production to make up for the shutdown of Libyan oilfields since February.
But Badri, who was Libya’s energy minister from 1990-2000, said those members of the Organization of Petroleum Exporting Countries who raised output to make up for the Libyan loss will doubtless cut output again.
“I can assure you that when Libya comes back, our member countries will reduce their production. I have no doubt,” Badri told the Gulf Intelligence Energy Markets Forum in Dubai.
“I don’t need to speak to member countries … It is in their benefit,” he said when asked if he had sought assurances from Gulf OPEC producers that they would reduce output again.
According to the latest official data published by the Joint Data Initiative Monday, leading oil exporter Saudi Arabia cut production from 9.813 million barrels per day in June to 9.606 million bpd in July, but is thought to have upped output to 9.76 million bpd in August.
Kuwaiti output remained unchanged at 2.6 million bpd in July, according to JODI data.
Some Libyan oilfields have recently restarted production and Badri said 1 million barrels a day of Libyan crude output was likely within six months.
Badri, who headed Libya’s National Oil Corporation until 2006, said production in Libya could be back to pre-war levels in around 15 months.
Overall production before the war was 1.6 million bpd.
Badri said the U.S. economy was not growing as much as OPEC had forecast it would in early 2011 and that U.S. economic weakness, combined with European debt woes, were starting to affect oil demand.
“Western stimulus packages are not really working to generate jobs [or] economic activity in the U.S. and Europe,” he said. But OPEC expects the Chinese economy to grow 8.5 percent next year, down from OPEC’s 9 percent growth forecast for 2011, Badri said, supporting demand for Middle East oil in a main export market Asia.
He said that about $16-20 of current oil prices is a supply risk premium, reflecting Libya’s output cut and jitters over other supply problems.
Badri said the International Energy Agency had assured OPEC that the consumer countries of the OECD will not make a habit of releasing emergency oil stocks, after the consumer country group released stocks to dampen prices in June – a move widely condemned by oil producers in the group.
“The IEA assured me that that is it, and that it will cooperate with OPEC,” Badri said, referring to the surprise release of OECD oil stocks announced in the weeks after OPEC failed to agree an increase in output.
OPEC now recognizes the National Transitional Council as Libya’s representative, Badri said, after the United Nations approved a Libyan request to accredit envoys of the country’s interim government as Tripoli’s sole representatives at the world body Friday.
“OPEC will recognize the NTC … and they will sit in the same chair,” Badri told the audience.
The OPEC members that did not vote to officially recognize the interim government of Libya in New York Friday may maintain bilateral relations with the ruling NTC, but the U.N. vote means the NTC now has a place at the OPEC table.