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23 April 2024

Opec set to decide output question today

By Karen Remo-Listana




The Organisation of Petroleum Exporting Countries (Opec) will announce on Wednesday whether it is going to increase or reduce output or continue at the existing level.


But analysts are convinced the 13-nation group will not raise production and will instead maintain or even cut the current quota.


Opec President Chekib Khelil has said production will not be increased when the organisation meets today. And Venezuela’s oil minister, Rafael Ramirez, said he would support either a cut or a decision to leave output unchanged.


Khelil also implied that output could be cut but Opec may hesitate to take such a step if oil prices remain close to $100 per barrel, according to the London-based Centre for Global Energy Studies (CGES). “With the US economic outlook remaining weak oil prices in excess of $100 per barrel may not last long but much will depend on how Opec views the situation,” a CGES spokesman told Emirates Business.


“Although crude oil stocks in the United States have risen by three days since the beginning of the year, half of this has come from falling refinery throughput as plants enter turnaround.”


The market has been gripped by fears that Opec will continue its policy of restricting supplies to keep inventory cover low. This policy was partially masked when Angola rejoined the group. But output by the other members dropped last year by 0.67 million barrels per day (mbpd), causing global stocks to fall by the same amount.


A number of factors contributed to push prices above the $100 psychological threshold. Another US refinery was hit by a fire, tropical cyclone Nicholas took a 200,000 barrels per day (bpd) bite out of Australian production and Nigeria’s NNPC increased its estimate of shut-in production in the Niger Delta.


These physical disruptions, CGES said, have been compounded by uncertainty over the future availability of oil as a result of the rising political tensions between Venezuela and the US and reports of the killing of Nigerian rebel leader Henry Okah while in detention.


“All of this has taken place in an environment in which global stockcover is as low as it has ever been and oil demand is still growing strongly in the subsidised markets of Asia and the Middle East, where final consumers have not felt the impact of rising oil prices, while Opec seems obsessed with the slowdown in the US and the rest of the industrialised world.”



Official visit


UAE Energy minister Mohammed bin Dha’en Al Hamili left for Vienna yesterday to participate in the ordinary ministerial meeting of the Opec.


The meeting in the Austrian capital will discuss the latest developments on the international oil market and the measures to be taken by the organisation to ensure stability in the oil and gas sector, in view of the reports which would be submitted to the meeting on the future demand and supply of the commodity and the overall world economic situation. (Wam)