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OPEC urged to follow Saudi in boosting oil output

15 december 2011, 16:03
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Saudi Minister of Petroleum and Mineral Resources Ali Naimi attends the opening session of the 160th meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna. ©AFP
Saudi Minister of Petroleum and Mineral Resources Ali Naimi attends the opening session of the 160th meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna. ©AFP
The International Energy Agency (IEA) on Tuesday called on members of the OPEC oil cartel to keep up with key member Saudi Arabia's above-quota crude production to aid global economic recovery, AFP reports.

Speaking in Singapore hours ahead of a crucial Organisation of Petroleum Exporting Countries meeting in Vienna, IEA chief economist Fatih Birol said current oil prices pose "a major risk for the economic recovery worldwide".

"Saudi is doing a great job and I would consider Saudi Arabia as the central banker of the oil markets, and the decision that they will bring more oil into the markets is definitely a good one," Birol added.

"But I will like to see that this move of Saudi Arabia is followed by other key oil producers," he said.

Birol, whose Paris-based agency was set up to ensure reliable, affordable and clean energy after the 1973-74 oil crisis, also called for more investment in future oil production capacity.

OPEC kingpin Saudi Arabia -- together with Kuwait -- has boosted crude production to compensate for the suspension of Libyan oil exports and avoid a surge in world prices after the North African country's descent into civil war this year.

But some OPEC members -- notably Iran which currently holds the rotating presidency of the cartel -- are calling on them to fall back into line as Libyan oil flows back into the market after the October overthrow of Moamer Kadhafi.

However, Saudi oil minister Ali al-Naimi on Monday said he was happy with Riyadh's current 9.45 million barrels per day (bpd) output level, significantly higher than its quota of 8.05 million bpd.

The issue will likely be brought up in OPEC's meeting on Tuesday, where the cartel will decide whether to change its oil production levels in the face of heightened tensions over Iran, higher Libyan output and a weak economy.

Analysts widely expect the cartel -- which supplies a third of the world's crude -- to maintain its official output target of 24.84 million barrels per day, a level that has stood for almost three years.

OPEC currently supplies 30 million barrels to the market, including the output from Iraq which is exempt from quotas as the country struggles to rebuild after years of conflict.

Excluding Iraq, the cartel is pumping almost 10 percent above its aggregate quota limit.

Birol lauded Libya's speedy crude production recovery in the aftermath of the civil war.

"It is growing much more rapidly than many people thought and this is of course definitely very good news... We hope to see before end of 2012 it will come close to what it was before," he said.

He warned of volatility in oil prices and stressed that "any production lower than today's level will not be good news."

"Our analysis shows that the oil markets may well go through a bumpy road, more volatility and perhaps more interconnection with the geopolitics," Birol said.

New York's main contract, light sweet crude for January delivery, fell 31 cents to $99.83 a barrel in the afternoon and Brent North Sea crude for January delivery was off 34 cents at $109.16.

The IEA earlier Tuesday again cut its forecast for growth of global oil demand this year, slashing it by 200,000 bpd due to the eurozone debt crisis, although likely sanctions against Iran over its nuclear programme are holding up prices for now.

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