Two of Opec’s leading members, Iran and Kuwait, have rebuffed that oil prices exceeding $90 per barrel were damaging the global economy, saying there was no need to increase supply.
A barrel of ICE February Brent crude oil rose $1.90 to $95.43 on Wednesday, hovering inside what the International Energy Agency has called a “dangerous zone” for the world’s economic health. Nymex February West Texas Intermediate, the US benchmark, rose 92 cents to $90.30 a barrel.
Opec’s oil ministers chose to keep production quotas unchanged during their most recent meeting, held in Ecuador on December 11.
The club’s members are not set to meet again until June 2 – and two of their number signalled that there remained no need for a change of policy.
Brent crude has risen 18.4 per cent in the past 12 months, prompting the IEA – the western countries’ energy watchdog – this week to warn that prices could threaten the economic recovery.
An oil price in the range of $80-$100 was acceptable, said Sheikh Ahmad al-Abdullah al-Sabah, the Kuwaiti oil minister. The cost of a barrel was likely to reach $100 this year, he added, saying: “I don’t know when, it depends on the market.”
Sheikh Ahmad said that Opec was unlikely to increase supplies, “at least not in the first half” of 2011. Kuwait pumped 2.3m barrels per day last month, making it the fourth biggest producer in Opec. Sheikh Ahmad said that there would be no meeting of the cartel’s oil ministers before their next scheduled gathering “unless something dramatic happens”.
Kuwait’s position was shared by Iran, the second largest producer in Opec. Mohammad Ali Khatibi, Iran’s senior representative at Opec, told Reuters that the recent increase in oil prices was a “nominal” rise caused by the dollar’s decline. “Our concern is not the nominal price; it’s the real price,” he said.
Khatibi added: “The market is balanced for supply and demand, and there is no shortage right now, so no need to supply more.”