Oil ministers from Organisation of Petroleum Exporting Countries’ (OPEC) three biggest members rejected the possibility of a glut in global crude supply next year amid an increase in US output and efforts by Iran and Libya to add barrels to the market.
The OPEC, which provides about 40 percent of the world’s oil, won’t need to cut production in 2014 because growth in demand can absorb the additional crude, the ministers from Saudi Arabia, Iraq and Kuwait said Monday after a meeting of Arab oil exporters in Doha, Qatar.
US benchmark West Texas Intermediate crude climbed to a two-month high on December 20, after a report showed the US economy expanded in the third quarter at a faster rate than previously estimated. WTI for February delivery rose 28 cents to $99.32 a barrel in New York.
“Do you know why WTI traded near $100 in the past few days? It’s because the market is in fear of a shortage of oil and not in fear of oversupply,” Saudi oil minister Ali al-Naimi told reporters. “The market reflects the situation.”
OPEC agreed when it last met on December 4 to keep its output target unchanged at 30 million barrels a day because the market is balanced, said al-Naimi, whose country is the group’s largest producer. Commerzbank AG said in a December 10 report that OPEC would need to reduce output should Libyan and Iranian production return to the market.
OPEC “will have to cut or accept lower prices,” Robin Mills, head of consulting at Manaar Energy Consulting and Project Management in Dubai, said. “Even if Libya and Iran don’t come back, OPEC will be under pressure.”
Exports from Libya plummeted this year as political strife and labor protests shut oil fields, refineries and ports.
The North African nation will resort to force if necessary to reopen the ports, its minister Abdulbari al-Arusi told reporters yesterday. The shutdown has cut Libyan output to 250,000 barrels a day from 1.4 million barrels a day in March.
Iran wants to raise output to 4 million barrels a day, the country’s oil minister, Bijan Namdar Zanganeh, said at this month’s OPEC meeting, after a November 24 agreement on the country’s nuclear programme opened the door to an easing of economic sanctions.
Iran pumped 2.65 million barrels a day in November, according to data compiled by Bloomberg.
Kuwaiti oil minister Mustafa al-Shemali said the group doesn’t need to change its target in the next six months as the market is expected to remain stable, “with no bumps,” until OPEC meets next in June.