OPEC unclear over oil output amid expensive crude

The OPEC headquarters in Vienna
©AFP/APA/File - Barbara Gindl

ABU DHABI - OPEC left open the door on Tuesday to an oil output increase as Saudi Arabia refused to spell out its intentions on the eve of a ministerial meeting of the crude-producers' cartel in Abu Dhabi.

Saudi Arabia Oil Minister Ali al-Nuaimi told reporters here that "all options are open" ahead of OPEC's output decision on Wednesday.

An OPEC delegate, wishing to remain anonymous, hinted that the Organisation of Petroleum Exporting Countries may decide to hike its daily oil output by half a million barrels with crude prices near record highs.

"Industry specialists seem evenly divided on whether OPEC will agree tomorrow to raise oil production by another 500,000 barrels a day," Capital Economics chief analyst Julian Jessop said in London.

Most OPEC members on Tuesday said the cartel should keep production quotas unchanged as oil supplies were adequate, while demand was falling amid concerns that global economic growth could slow during the coming months.

OPEC members Iran, Libya, Qatar and Venezuela voiced concern that additional supplies may dampen oil prices, while insisting the cartel was not responsible for the high cost of crude.

The 13-member organisation last decided to raise production in September when it agreed to provide an extra 500,000 barrels a day to the market, which took effect on November 1.

Despite the increase, oil prices went on to strike a record high of 99.29 dollars a barrel on November 21. Crude futures tumbled below 88 dollars on Tuesday amid the possibility that OPEC could decide to hike output Wednesday, traders said.

"We don't see any reason to have more oil in the market," Venezuela's minister of energy and petroleum, Rafael Ramirez, told reporters Tuesday on arrival in the United Arab Emirates' capital.

An oil refinery in southern Iraq
©AFP/File - Essam Al-Sudani

"We are going to discuss the market situation tomorrow at the meeting to see the different options," he added.

Qatar's Minister of Energy and Industry Abdullah al-Attiyah said there was "nothing that warrants an increase."

Nigeria, Africa's biggest crude producer, refused to be drawn over Wednesday's decision by OPEC, which produces about 40 percent of world oil.

Meanwhile, the OPEC delegate said any output increase would be a "gesture" to the oil market which holds the cartel responsible for crude prices soaring in recent months.

"OPEC will either roll-over or make a gesture of 500,000 barrels per day" the delegate told journalists.

Saudi Arabia, the world's biggest producer of crude, is the only OPEC member with sustainable spare capacity.

Members of the organisation blame geopolitical tensions and market speculation for driving oil prices to record highs, but many analysts believe supplies are insufficient amid strong demand from China and India.

John Hall, an independent analyst with John Hall Associates, said OPEC needed to increase its daily output immediately by one million barrels to overcome supply shortages.

If it did not, "the (oil) price will go back up to 100 dollars and I think we could see 100 by the end of the year."

Hall added: "Saudi Arabia can increase its output by a million barrels at once."

Global Insight analyst Simon Wardell said any output rise would be a public relations stunt, as OPEC was already producing above its official quota.

"Any quota increase would amount to a PR exercise as it would simply bring quotas in line with current production," he said.

OPEC comprises Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.