OPEC Majority Backs Current Output

OPEC Majority Backs Current Output, Officials Say (Update1)

Nov. 23 (Bloomberg) — OPEC at its next meeting should agree to keep oil output at its current level to help fill inventories and prevent a jump in prices during the U.S. winter, said two OPEC officials involved in the group’s discussions.

Saudi Arabia, Qatar and other Arab nations in the Persian Gulf, which account for more than half of the output from the 11- member Organization of Petroleum Exporting Countries, will probably oppose any proposal to reduce oil sales when members meet Dec. 10 in Cairo, said the delegates, who asked not to be named.

OPEC is pumping at its highest rates in 25 years after crude oil prices last month soared to $55.67 a barrel in New York, the highest in more than two decades of futures trading. Crude has since fallen 13 percent as concern eased of shortages and disruptions to supply from Iraq, Nigeria and Russia.

“It’s unrealistic to think producers will cut output when oil prices are still near $50 a barrel — it won’t happen,” Jassem al-Saddoun, an oil analyst with the Kuwait-based Al Shall economic research institute.

Saudi Arabia, the group’s largest member, plans to pump 9.5 million barrels a day in December, in line with this month’s supply, an oil ministry official said.

Crude oil was down 6 cents at $48.58 a barrel in electronic trading on the New York Mercantile Exchange, as of 12:41 p.m. in London. Prices are up 49 percent so far this year.

Cut Proposal?

Rafael Ramirez, the energy minister for Venezuela, OPEC’s third-largest producer, on Nov. 18 said his nation would back an Iranian proposition to lower production. Venezuelan President Hugo Chavez said the market is now adequately supplied, Spanish newspaper La Vanguardia reported today.

Iran is concerned by a drop in prices for lower-quality grades of oil, which are more difficult to process into gasoline and other fuels used in transportation. Iranian heavy crude oil costs $36.68 a barrel, $7.59 a barrel less than benchmark Brent crude. The discount is more than double the average during the past five years.

High oil prices can hurt global economic growth, and in turn energy demand, while encouraging development of oil fields in non- OPEC nations such as Russia.

OPEC members produced 30.61 millions barrels of crude oil a day in October, according to a Bloomberg survey of oil companies, producers and analysts published on Nov. 3. It was the most oil OPEC has pumped since November 1979, U.S. Energy Department figures showed.

To contact the reporter on this story:
Sean Evers in Dubai on evers@bloomberg.net

To contact the editor responsible for this story:
Tim Coulter at tcoulter@bloomberg.net
Last Updated: November 23, 2004 07:44 EST