Qatari Oil Minister Abdullah al-Attiyah said on November 3rd that he believes an oil supply disruption as a result of Middle East tensions is unlikely. Al-Attiyah said that: “I believe strongly there will be no disruption in crude oil supply because of Iraq or other tensions in the Middle East.” He indicated that high crude prices are not the result of a supply shortage.
“The market already has a surplus of more than 2 million b/d. Price manipulators, shortage of tankers, limitation of production by refiners and psychology of the market have skewed prices to these high levels,” he said.
The oil minister also said that OPEC would discuss the price band mechanism and supply and demand levels at its upcoming November 12th meeting, but that he doubted whether the group would move to raise output further than its latest 500,000 b/d increase that took effect on October 31st.
Al-Attiyah indicated that he would like to see a revision of the group’s price band mechanism, under which if the price of OPEC’s basket of seven cruds remains over $28 a barrel for more than 20 consecutive working days, an increase in output of 500,000 b/d will automatically be triggered.
“I believe we should modify [the price band mechanism] so that it relates to the real demand and supply situation,” he said. Qatar and other OPEC members have cautioned that further increases in supply could lead to a price fall in the first quarter of 2001 when demand is expected to decline.
Also on the agenda at the next OPEC meeting in Vienna is the question of the new secretary general to succeed Nigeria’s Rilwanu Lukman. Saudi Arabi, Iran, Iraq and Libya have all nominated candidates for the post, which requires the unanimous approval of all 11 members. The group has been in a deadlock regarding the position since September 1999.