OPEC oil ministers, most resolved not to cut production levels amid stubbornly high prices, focused Tuesday on political instability, terrorist threats and other factors shaking confidence in the world’s crude markets.
Worries over Iran’s nuclear ambitions, militant threats in Nigeria and attacks on Middle East facilities — including last month’s bombing of the world’s largest oil-processing complex in Saudi Arabia — have stoked concerns about supply disruptions as OPEC maps out its pumping and pricing strategies for spring and summer.
With consensus building among the Organization of Petroleum Exporting Countries not to lower production, and with crude-oil prices hovering above $62 a barrel, the 11-nation group planned to assess “the influence of new political issues on the oil market,” Qatar’s oil minister, Abdullah bin Hamad al Attiyah, said before Wednesday’s meeting in Vienna.
Attiyah said oil ministers also would discuss demands on the market in the second quarter, a period when demand usually decreases. The International Energy Agency estimates that demand will fall by 2 million barrels a day in the April-June quarter.
Recent attacks by militants on Nigerian pipelines and oil facilities have reduced the country’s production by 455,000 barrels a day. Nigeria normally exports 2.5 million barrels daily.
“The tangible, physical disruption of Nigerian supply has propped up prices over the past few weeks,” said Jason Schenker, an economist with U.S.-based Wachovia Corp. “That’s a big deal. And then we just saw prices shoot up again over Iran.”
Iran’s OPEC governor, Hussein Kazempour Ardebili, told the unofficial ISNA news agency that Tehran’s escalating standoff with the West over its suspect nuclear program would not affect its exports of crude, saying Iran would continue to serve as “a stable source of supply and as one of the main suppliers of oil to the world.”
His comments came as the International Atomic Energy Agency’s 35-nation board met in Vienna amid threats by Iran to begin large-scale uranium enrichment if the U.N. Security Council intervenes.
Kuwait’s energy minister, Sheik Ahmed Fahd Al Ahmed Al Sabah, said oil prices should begin to fall next month, assuming that OPEC — which pumps about a third of the world’s oil — maintains output at current levels and geopolitical tensions do not worsen.
OPEC’s official output target is 28 million barrels per day, though that does not include Iraq, which adds an additional 1.5 million barrels. Al Sabah said there will be an “oversupply” of 1.5 million to 2 million barrels a day in the second quarter, in part because of a milder-than-usual winter in the northern United States.
“No doubt that what keeps the oil prices at the current level is instability, and the political situations in the areas of the oil-producing countries affect the markets,” said Saudi Oil Minister Ali Naimi, but he cautioned: “There is no fear that oil will not be available.”
Naimi said in an interview with the pan-Arabic newspaper Al Hayat that his country also opposed production cuts.
But Venezuela’s oil minister, Rafael Ramirez, said last week that OPEC members should consider cutting production by 500,000 to 1 million barrels of crude a day. The South American country is one of the group’s most strident voices in favor of constraining output to keep prices high.
“I think an OPEC price ceiling of $40-$50 a barrel is favorable for the organization’s members,” Shamkhi Faraj, a top Iraqi oil official, told reporters Monday before leaving Baghdad for Vienna. He, too, predicted the production ceiling would remain unchanged.
Mohammed al-Hamli, oil minister of the United Arab Emirates, said Tuesday that the cartel’s output was “already adequate.”
OPEC’s acting secretary-general, Mohammed Barkindo of Nigeria, said Tuesday that he expected no surprises from the meeting.
Light, sweet crude for April delivery was down 31 cents to $62.10 a barrel in electronic trading Tuesday on the New York Mercantile Exchange. April Brent on the ICE Futures exchange gained 24 cents to $62.58 a barrel.
Iran’s Ardebili also suggested the group was unlikely to raise the ceiling and urged member producers to demonstrate an “observance of discipline” by not pumping above their quotas.