OPEC ministers are expected to agree to the second production cut of the year at the group’s next meeting in Vienna on March 16th, a senior Saudi source said on March 6th. “The possibility of cutting production is very, very high.
We want to maintain $25 a barrel,” the source said. Saudi officials have reportedly been calling for the group to consider another output cut, fearing that falling world demand in the second quarter could lead to price slides.
OPEC Secretary General Ali Rodriguez had said on March 5th that there was a consensus among cartel members to take action if prices drop sharply.
Rodriguez said that: “If there are sharp falls in prices, we will apply corrective measures.” He stressed that any output cuts would depend on demand forecasts for the second quarter.
“We still haven’t arrived at a consistent determination of what demand will be like,” he said. The former Venezuelan oil minister also pointed to rising stock levels. He said that: “Inventories, as we have said, aren’t as low as has been suggested.
No, there is no great shortage of supply, oil supply is sufficient.” In addition, Rodriguez indicated that the group would take into consideration the level of Iraqi exports, which are expected to rise to 1.5 million b/d in March, up from about 1.3 million b/d in February, but still lower than the Iraqi target of 2.3 million b/d.
Saudi Oil Minister Ali Naimi is scheduled to meet with Venezuelan Oil Minister Alvaro Silva and Mexican Oil Minister Ernesto Martens in Riyadh on March 12th-13th to discuss oil policies and demand forecasts ahead of the OPEC conference.
Non-OPEC producers Mexico and Norway have indicated that current market conditions do not warrant a production cut.
© 2001 Mena Report (www.menareport.com)