Saudi oil minister argues for OPEC to cut output

By Susanna Loof

The Associated Press
Journalists try to get a statement from Iraq’s Minister of Oil Ibrahim Bahr Al-Ulum during his arrival at an hotel in Vienna, on Tuesday. Ministers of the Organization of the Petroleum Exporting Countries conference (OPEC) are scheduled meet on Wednesday at the OPEC’s headquarters in Vienna.

VIENNA, Austria — Despite current high prices for crude, markets are already well supplied and any decision by OPEC to pump more oil at this time would be destructive, the oil minister for the group’s largest member said Tuesday.
Saudi Arabia’s oil minister Ali Naimi blamed investors and speculators for driving prices up to 13-year highs and said that current prices ‘‘have absolutely nothing to do with supply and demand’’ for crude. He argued OPEC should proceed with its planned cut in output targets.
Naimi spoke to reporters as OPEC representatives arrived in Vienna to review the oil market and set output policy for the crucial second quarter of the year.
The Organization of Petroleum Exporting Countries meets Wednesday to decide whether to follow through on its agreement last month to cut its crude production target by 4 percent, or 1 million barrels a day, starting April 1.
The meeting comes amid unexpectedly strong demand for oil in Asia and the United States. However, OPEC members fear that demand will soon slow due to a seasonal lull, and they had agreed to trim output to prevent a damaging fall in prices. Given the recent price rise, some delegates were saying that they might consider several options at the meeting, including postponing or even abandoning their planned cut.
Naimi’s argument against any increase in production carries special weight because Saudi Arabia is the biggest and most influential of OPEC’s 11 members.
He said OPEC must reduce its output target as planned, arguing there was already a surplus of crude and that adding more oil now would further weaken the soft market expected in the second quarter.
Naimi found support from at least two OPEC counterparts.
‘‘I feel we should go with the cut,’’ said Libyan oil minister Fathi bin Shatwan. ‘‘The supply is enough in the market. Maybe there’s a bit of oversupply even.’’
Algerian oil minister Chakib Khelil said OPEC’s credibility would suffer if it reneged on its pledge to reduce output.
However, Kuwaiti oil minister Ahmed Fahd al-Ahmed Al-Sabah said OPEC should postpone its production cut until it meets again in June, ‘‘unless there is an emergency,’’ he told reporters before boarding a plane for Vienna.
OPEC supplies about a third of the world’s oil. Its current output target is 24.5 million barrels per day.
Prices have soared to uncomfortably high levels, with U.S. light, sweet crude reaching a 13-year high of $38.35 per barrel on March 17. U.S. crude futures for May delivery were trading early Tuesday at $35.70 per barrel, up 25 cents, in New York. In London, May contracts of North Sea Brent crude were trading 24 cents higher at $31.98 per barrel.
Libya’s bin Shatwan sought to deflect criticism of OPEC for the high prices by claiming that the recent plunge in the value of the U.S. dollar has added about 30 percent to the price of crude. Oil is denominated in dollars.
‘‘The real value of oil right now is maybe $20,’’ he told reporters.
Despite announcing two production cuts in six months, OPEC has boosted its actual output to try to keep pace with the rising market.
OPEC agreed on Feb. 10 in Algiers, Algeria, to reduce its output ceiling by 1 million barrels a day to 23.5 million barrels a day starting Thursday, to try to keep prices from tumbling this spring.
But the decision isn’t inexorable, as United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri told the pan-Arabic newspaper Al Hayat in an interview published Tuesday.
Al-Nasseri said the likely outcome of the Vienna meeting would be a delay in OPEC’s production cut. The decision at the Algiers meeting ‘‘has been taken, but that does not mean it cannot be reviewed. It is not sacred,’’ the paper quoted him as saying.
Even if OPEC agrees to postpone or abandon its planned reduction, that won’t bring much consolation to American motorists, who are paying record prices for gasoline. Some analysts say any foreseeable increase in oil supplies probably won’t mean cheaper gas because inventories of the fuel won’t increase in time for the peak summer driving season.
Analysts attribute the high U.S. gas prices mostly to a robust domestic demand, limited refining capacity and concerns about possible shortages in blending components for reformulated gasoline.