Top oil exporter Saudi Arabia has boosted supply to help meet the world’s need for fuel and may further increase output later if needed, a senior Gulf OPEC source said Wednesday. UAE is prepared to raise oil production, OPEC governor says.
OPEC’s 13 members, especially core Gulf producers, are taking their output cues from global oil demand rather than sticking to production targets, said the source familiar with Saudi thinking. “Whenever there is demand it will be met by OPEC,” he said. “The majority of OPEC producers definitely don’t like this high oil price because it is neither in their interest nor in the interest of the global economy, and it’s especially painful for the developing world.”
US crude hit a record above $135 a barrel last week, prompting consumer countries such as the US to renew their plea for more oil from the Organization of the Petroleum Exporting Countries. OPEC’s leading producer Saudi Arabia has been adjusting supply to match demand since August last year when prices were around $60 and it was pumping around half a million barrels per day less than now. Saudi Oil Minister Ali al-Naimi said earlier this month output would rise by 300,000 bpd (barrel per day) and hit 9.45 million bpd in June. Riyadh is pumping about 9.1 million bpd this month, the source said.
Global demand is likely to increase this year by about 1 million bpd, with demand picking up in the Q3, the senior Gulf OPEC source said, which explains the current Saudi production increase. Last September OPEC agreed a 500,000 bpd increase in its formal output targets, with Saudi Arabia providing the greatest share. The group holds its next official conference on September 9 inVienna. Most OPEC members would like to see lower prices, but there was little they could do as the market was responding to factors beyond supply and demand, the source said. If those fundamentals dictated the price, oil would cost around $60 to $70 a barrel, the source said. The world oil market balance is similar to that in 1999, when the price was less than $20, he added.
The oil market has risen in large part because of increasing doubt over production capacity and global oil reserves, the OPEC source said. That concern was unwarranted, he said, but helped to explain a roughly $5 premium for crude prices for delivery in 2016 compared with the prompt contract now trading at about $126 a barrel. A wave of investment activity has also been fuelled by the weakness of the US currency and lower US interest rates, which adds to the appeal of dollar-denominated commodities.
Oil prices are rising too fast and have risen too much, Yousef Omair bin Yousef, CEO of Abu Dhabi National Oil Company, has said. “I think global oil prices are rising too high and too fast and it isn’t a healthy thing. This isn’t doing anyone any good,” he told Dow Jones Newswires. “(Price) stability is important.” Due to the high prices, OPEC members, such as the United Arab Emirates are producing oil at the maximum possible level, he added. “There is no spare capacity because there is no reason to keep spare capacity.” Abu Dhabi is the single biggest producer of oil within the UAE, which “is now producing a total of 3 million barrels per day, including liquids and condensate,” Yousef said. By the end of 2008, the UAE’s output is expected to increase by 130,000 bpd of condensate and about 200,000 bpd in the form of natural gas liquids, he added. (Gulf Times)
UAE PREPARED TO RAISE PRODUCTION
The United Arab Emirates, OPEC’s third-largest oil producer, is prepared to raise production if required by the market. “The UAE is willing and well-prepared, if the market requires, to meet our responsibilities,” Ali Al Yabhouni, the UAE’s governor to the Organization of Petroleum Exporting Countries, told reporters at a media briefing in Dubai Thursday. (Bg)