UAE Oil Minister Mohammed Al Hamli has expressed his concerns over the possible knock-on effects of the sub-prime crisis in the United States on the world economy and oil markets.
He said Opec was monitoring the impact on crude oil demand of a possible slowdown in the global economy and would discuss the matter at its meeting tomorrow.
Opec is widely expected to resist consumer calls for more oil when it meets, worried by a slowing US economy and the onset of seasonally lower demand in the spring. Oil has fallen to around $91 a barrel from a record $100.09 on January 3, easing pressure on Opec to pump more.
Speaking just before he left for the Opec meeting in Vienna, Hamli did not say whether he expected the oil exporting group to raise production, but said that speculation had led to a divergence between oil prices and market fundamentals.
He said that a weak US dollar was a factor behind high oil prices and was eroding the revenues of oil-producers and hurting their spending power.
However, Hamli said that Opec was committed to pumping more crude oil when the market needs it and maintaining fair prices for producing and consuming countries. “The priority for Opec is a balanced petroleum market,” he told state news agency Wam, adding that he expected a fall in demand in the second quarter.
Meanwhile, Qatar’s energy minister said Opec will consider a supply reduction in the future because world economic growth is slowing and oil inventories are ample.
“The world has sufficient supply, even oversupplied in some places,” Qatar’s Abdullah bin Hamad al Attiyah said in an interview in Doha yesterday. “So to increase output, I don’t think this is on the agenda.”
He said the 13-member producer group, the supplier of more than 40 per cent of the world’s oil, would consider a production cutback “if the world economy moves towards a recession”. Weaker economies may lead to reduced demand for energy, he said. Attiyah joins other officials in Opec – from the UAE, Iran, and Ecuador – to have rejected US President George W Bush’s request earlier this month for increased production.
“There is no need to take any action,” Shokri Ghanem, Libya’s top oil official and the chairman of its National Oil Corp, said in a telephone interview from Tripoli yesterday. “There should be caution” because of slowing economies, he said.
Opec will keep its output target unchanged at 29.67 million barrels a day when it meets in Vienna, according to 29 of 32 analysts surveyed by Bloomberg.
The International Monetary Fund yesterday cut its forecast for global growth this year to 4.1 per cent as tighter access to credit in the United States weighs on other assets and economies.
“I don’t think Opec will push for a cut,” said John Sfakianakis, Chief Economist at HSBC Holdings Plc-controlled Saudi British Bank, based in Dubai. (Agencies)
Opec monitors US mortgage crisis