Saudi Arabia expressed concern on December 11th over the recent steep drop in oil prices, but said that the time is not yet ripe for OPEC to cut its production levels.
An oil official in the kingdom was quoted as saying that: “Saudi Arabia is concerned about last week’s sharp price decline, but oil prices are still within OPEC’s desired price range.”
He added that: “Saudi Arabia’s commitment to a price of about $25 a barrel is strong beyond a doubt. But it is still too early to take action to defend that price.”
Other OPEC members contend that the group should move to cut output at their next meeting on January 17th.
Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah said on December 11th that: “It has become almost certain that OPEC will agree at its January 17th meeting to cut production levels if prices continue to fall at a similar rate witnessed lately.”
He added that: “One million b/d will be withdrawn if need be, especially with the arrival of spring and summer and the drop in demand.”
Venezuelan President Hugo Chavez also said on December 10th that OPEC could curtail production by 1 million b/d in order to avoid a steep decline in prices, after Iran’s OPEC Governor Hossein Kazempour Ardebili said on December 5th that Tehran may call for another extraordinary OPEC meeting in late February or early March.
Kazempour said that: “To maintain balance between supply and demand, OPEC may need to cut production by 1 million b/d in the first quarter of next year.
In the second quarter of 2001, there may be a global surplus of 3.5 million b/d if Iraq returns to the markets.”
The International Energy Agency said in its monthly oil market report published on December 11th that OPEC members, excluding sanctions-bound Iraq, increased output by 150,000 b/d in November to 26.52 million b/d, just shy of their quota of 26.7 million b/d.
Saudi Arabia and Kuwait were seen producing above their quotas at 8.79 million b/d and 2.22 million b/d, respectively, while Venezuela and Indonesia, pumping at 2.98 million b/d and 1.32 million b/d, respectively, failed to meet their targets.