Saudi Arabia has called for an increase in OPEC output target despite a recent fall in crude prices, according to a report.
“Our analysis suggests that we will need a higher ceiling than currently exists,” Petroleum and Mineral Resources Minister Ali Al-Naimi said in an interview with the Gulf Oil Review ahead of a meeting of the Organization of the Petroleum Exporting Countries on Thursday. Iraq’s OPEC President, Abdul Kareem Luaibi, earlier said there is a surplus in supplies from OPEC.
“It’s very clear there is a tremendous surplus that has led to this severe decline in prices in a very short time span,” Luaibi said, according to Reuters.
Brent crude has fallen about $28 a barrel since March to $100 a barrel.
“Our actions have helped the oil price drop from $128 in March to about $100 today which has acted as a type of stimulus to the European and world economy,” said Al-Naimi.
He said OPEC would need to study an assessment from economists, who met at the group’s Vienna secretariat on yesterday to calculate how much OPEC crude is required to balance world supply and demand in the second half of the year.
OPEC delegates said the economists settled on a figure of 30.7 million bpd, higher than the existing official target of 30 million bpd but well short of current output of 31.8 million.
That would imply that even with a higher formal target, actual supply would need to drop to prevent a substantial build in inventories on the 90 million bpd world market during the remainder of the year.
“Given our large crude oil reserve situation, we certainly want to see a sustained market for crude oil over the long term,” Al-Naimi said, according to a Reuters report.
“This calls for moderation, but on the other hand, with the cost of oil production going up ... a reasonable price is required to ensure exploration can continue.”
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