Oil price falls, but Opec’s in no hurry
The Opec has no plans as yet to call an emergency meeting on supply cuts, an Opec official said on Wednesday, amid signs some of the group’s biggest producers are at ease over oil’s 20% decline since mid-July.
By Agencies |
DUBAI: The Organisation of Petroleum Exporting Countries (Opec) has no plans as yet to call an emergency meeting on supply cuts, an Opec official said on Wednesday, amid signs some of the group’s biggest producers are at ease over oil’s 20% decline since mid-July.
The steepest price drop in 15 years — from $78.4 a barrel for US oil in mid-July to below $60 earlier this week — prompted Opec’s president Edmund Daukoru to tell reporters on Tuesday “something needs to be done to steady the price.”
The Opec official said the exporter group that pumps a third of the world’s crude was discussing oil’s $17 drop, but had yet to call for an extraordinary session. When the time does come for Opec to cut output, the focus will be on Saudi Arabia, the world’s top oil exporter, and major Gulf Opec producers Kuwait and the United Arab Emirates.
But these countries appear in no rush to act and some Opec sources believe US crude must drop decisively below $60 before Gulf producers consider a cut. Kuwaiti oil minister Sheikh Ali al-Jarrah al-Sabah said on Wednesday, with US crude above $61, that most Opec ministers were content with prices and not inclined now to reduce output.
A week ago, Saudi oil minister Ali al-Naimi also described a US crude price of around $62 as reasonable. “Now, there is no inclination to make any amendment,” Sheikh Ali told a TV channel. That view was echoed on Wednesday in fellow Opec countries Libya and Qatar. “Prices are up after the Opec president’s comments — and that may take away some of the urgency,” said an Opec delegate.
ADVERTISEMENT
As a group Opec has been producing below its 28m barrels per day ceiling all year. But Saudi Arabia, Kuwait and the UAE have been pumping well beyond their allocated limits to make up for those struggling to meet theirs, such as Venezuela and Indonesia. “We’d want any cut to be collective, although in reality the Gulf producers would shoulder the burden,” said an Opec source. Opec last met on September 11, when oil was around $66, and decided to leave its output ceiling at 28m barrels per day until the next scheduled meeting on December 14.
Gulf sources said any emergency meeting of Opec was unlikely before ending of Ramazan in late October. Opec has carefully avoided setting a target price for oil, but some individual ministers have indicated a comfort level.
Iran has said it wants the price for Opec’s basket of crudes to hold above $60 — around $65 a barrel for US crude.
Opec president Daukoru on Tuesday said that global oil supply was expected to be a ’colossal’ 1.8m bpd above demand by the second quarter of ’07 and that “something needs to be done to steady the price.”
ADVERTISEMENT
It’s steepest price drop in 15 years. Crude prices fall from $78.4 a barrel in mid-July to below $60. Opec seems divided over calling emergency meeting.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
