CAIRO, Egypt – Saudi Arabia's king says the price of
oil should be $75 a barrel, much higher than it is now, but
his oil minister indicated Saturday that no measures will likely be
taken until OPEC meets again next month.
Saudi Oil Minister Ali Naimi said that the Organization of
Petroleum Exporting Countries will "do what needs to be
done" to shore up falling oil prices when the group
meets Dec. 17 in Algeria, but for now it was "too
early."
Other ministers at the hastily convened OPEC meeting in Cairo
did not entirely rule out cuts, including Libyan oil official,
Shokri Ghanem, who, ahead of the meeting, said "all options are
open."
But Naimi, whose country is the world's largest oil producer,
said the bloc needs to wait until the Algeria meeting to assess the
impact of earlier production cuts.
Naimi's comments came after Saudi King Abdullah
told the Kuwaiti newspaper Al-Seyassah in an interview published
Saturday that oil should be priced at $75 a barrel.
"We believe the fair price for oil is $75 a barrel," he said,
without saying how the price could be raised.
The price of crude stood at about $147 a barrel in mid-July. On
Friday, the U.S. benchmark West Texas Intermediate
crude for January delivery was trading at about $54 per
barrel.
The king was echoed by Qatar's Oil Minister Abdullah Bin Hamad
al-Attiya, who told the Arab news channel Al-Arabiya that prices
needed to rise to guarantee investment into the oil sector.
"The price between 70 to 80 (dollars a barrel) is the one
encouraging in investment and developing new or current oil
fields," he said. "It falls below 70 (dollars), the investment
would freeze, which will lead to a crisis in supply in the
future."
Nigerian Oil Minister Odein Ajumogobia also said they would be
"very happy" with oil at $75.
The cartel has already held an emergency meeting in Vienna on
Oct. 24 to announce a production cut of 1.5 million barrels per
day.
The cut failed to stop the price drop, and the cartel abruptly
convened the Cairo gathering on the sidelines of the
Organization of Arab Petroleum Exporting Countries'
meeting.
Kuwait's oil minister, Mohammed al-Aleem, said he
believes there is no need for OPEC to make a decision
in Cairo on cutting output. But he warned the market is
oversupplied, and didn't rule out the need for OPEC to cut
production further.
"We believe a decision could be taken ... but I think it will
happen in Algeria," he said.
Al-Aleem said current prices could undercut investment in future
projects and were not good for either producers or consumers.
The recent price drop has left OPEC price hawks Venezuela and
Iran clamoring for further reductions of at least 1
million barrels a day. Both countries need crude at about $90 per
barrel to meet spending needs aimed in part at propping up
domestically unpopular regimes.
Other OPEC members, such as Nigeria and Ecuador, face budget
problems too, making them reluctant to implement more cuts that
might shrink revenues further.
The Saudis are better positioned to cope with the drop in
prices. The International Monetary Fund estimates Riyadh needs
crude in the range of about $50 per barrel for 2008 fiscal accounts
to break even.
The statements by the king, however, indicate that normally
dovish Saudi Arabia is ready to see the price rise,
indicating cuts will eventually take place.
OPEC itself, along with the International Energy
Agency, has significantly revised down its projections for
demand growth in 2009.
Meanwhile, global crude inventories are growing, as evidenced by
a U.S. government report showing a surprisingly large 7 million
barrel build in stocks last week in the world's largest energy
consumer.
OPEC's last round of cuts would put its total production at
about 30.5 million barrels per day, according to the IEA. That is
about 500,000 barrels per day higher than the forecast call on OPEC
crude in much of 2009.
A Nov. 24 New York-based Oppenheimer & Co. research report
says that for oil to rebound to $65 a barrel, OPEC would need to
cut crude production by more than 3 million barrels per day from
its September levels — a move it called highly unlikely.
_____
Associated Press Writer Hadeel al-Shalchi contributed to this
report.
Ha...ha....it is pay back time for the greedy OPEC!
