The global oil market looks balanced, Saudi oil minister Ali Al Naimi indicated, while the secretary general of the Organization of the Petroleum Exporting Countries (OPEC) said some producers need to cut back as Libyan output rebounds.
Speaking at the same conference in the Saudi capital with less than a month to go before OPEC meets, the head of the International Energy Agency (IEA) reiterated the major consumer group’s concern that stubbornly high oil prices and tight supplies could harm fragile global economic growth. When asked about the current balance between supply and demand, Naimi asked the reporter’s view of the oil market.
The reporter said he thought the market was balanced, to which the oil minister of the largest crude exporting country replied, “I agree with you.” Saudi Arabia, Kuwait and the UAE have raised production over the last few months to compensate for the loss of Libyan oil and try to prevent high fuel prices from hindering economic growth after failing to convince OPEC to lift its group production target in June.
Oil output from OPEC member Libya has since resumed and risen more rapidly than many expected, while OPEC has trimmed its demand outlook, prompting OPEC price hawk Iran to call for Gulf OPEC producers to cut to pre-Libya crisis volumes. As most crude from the Gulf OPEC countries is exported to Asia, where demand for fuel remains strong despite concern about the euro crisis eroding demand in Europe, Saudi Arabia still sees robust demand for its barrels.
“Everything is fine now,” Naimi said when asked about the outlook for oil demand. Saudi Arabia, which produced about 9.4 million barrels per day (mbpd) in October, has not changed its production policy in the past when Naimi has said he sees the market is balanced. Ignoring calls from Iran to cut production to allow for the rapid resurgence of Libyan output, Kuwait pumped over 3 mbpd last week – evidence that Gulf countries continue to strive to push oil prices below $100 a barrel.
Naimi said it was too early to predict what might happen when OPEC next meets on December 14, after the last meeting ended in acrimony when Iran and Venezuela, among others, blocked a Saudi-led push for an OPEC-wide output increase. OPEC secretary general Abdullah Al Badri told reporters at the conference the next meeting in Vienna should be far friendlier, but that some producers would have to cut back production at some point to make way for Libyan supplies.