Oil producers, consumers divided on supply and price
UK Energy Minister Helen Liddell yesterday joined the number of Western politicians calling for further production increases from oil-producing nations including the Organization of Petroleum Exporting Countries, as OPEC itself retrenched its option to cut output in anticipation of a spring supply glut.
LONDON�UK Energy Minister Helen Liddell yesterday joined the number of Western politicians calling for further production increases from oil producing nations including the Organization of Petroleum Exporting Countries, as OPEC itself retrenched its option to cut output in anticipation of a spring supply glut.
Liddell, speaking at the International Energy Forum (IEF) in Riyadh, Saudi Arabia, said, "The only way to lower oil prices in a safe and sustainable way is to rebuild oil stocks and that means increasing supply. But the only people who can make those decisions are the leaders of the major oil-producing countries."
The UK energy minister's views reaffirmed comments made late last week by US Energy Sec. Bill Richardson, who was reported today to have asked representatives of the European Union to impress on producers that crude prices had to come down.
In London to speak at the Oil & Money conference, Richardson challenged the thinking of OPEC ministers, including Saudi Arabia's Minister of Petroleum and Mineral Resources Ali Naimi, who currently support consideration of cuts to OPEC output next year.
"We believe that cuts to production would not be healthy for the international economy," he said. "Clearly production cuts would not be very wise."
Richardson is in favor of an oil price standing somewhere between $20-$25/bbl. OPEC would prefer a price in the range of $22-$28.
Saudi Arabia's Naimi said at a news conference at the end of the IEF that delegates had agreed on the necessity of having "transparency and stability in the oil market to serve the interests of consumers and producers and to stem fluctuations in prices."
The Saudi minister underlined that sufficient energy supplies to meet rising demand and to create a "proper relationship among the concerned parties" had to be secured, particularly with regard to the financial, investment, and environmental aspects of the industry, OPEC's news agency, OPECNA, reported.
Naimi denied that industrialized countries had placed pressure on producers to increase output, but he added that there was "a desire on the side of producing countries to raise production, so as to meet increasing demand."
Liddell said that market transparency was a goal shared by "many oil producers and consumers" with a view to lowering oil prices.
"Better data and understanding of each other's data is essential to an efficient market," she said. "Consumers, producers, and developing countries in particular will all benefit from lower oil prices vital to global economic growth and stability."
The specter of cuts to OPEC's collective output, first seen at the organization's meeting in Vienna on Nov. 12, was raised anew by Qatari Minister of Energy and Industry Abdullah Bin Hamad Al-Attiyah at the Riyadh conference.
Al-Attiyah restated his belief that the 11 member nations of OPEC would take a decision in January whether to cut production in an attempt to ward off a "drastic drop" in crude prices.
According to an OPECNA report, Al-Attiyah said he "expected the second quarter of next year to witness a price drop that may reach lower than $22/bbl," a price which, in keeping with OPEC's so-called price band mechanism, would trigger a cutback in the organization's overall daily output.
Al-Attiyah, OPECNA reported, said the decision taken in Vienna not to implement another production increase was due to the fact that there was a surplus of more than 2 million bbl of crude in the market.