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WORLD> Middle East
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Saudi king says oil should be $75 per barrel
(Agencies)
Updated: 2008-11-29 20:49 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. 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. 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 US 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 Oppenheimer 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. |
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