Business | Oil & Gas
Opec likely to deny Bush plea for more supply
The Organisation of Petroleum Exporting Countries (Opec), the producer of more than 40 per cent of the world's oil, may reject US president George W. Bush's request to increase production and relieve the strain of rising energy costs.
- Bloomberg
- Published: 23:39 January 29, 2008
London: The Organisation of Petroleum Exporting Countries (Opec), the producer of more than 40 per cent of the world's oil, may reject US president George W. Bush's request to increase production and relieve the strain of rising energy costs.
Opec will keep its output target unchanged at 29.67 million barrels a day when it meets in Vienna on February 1, according to 29 of 32 analysts surveyed between January 24 and 28 by Bloomberg News. Ministers from Qatar, the UAE and Iraq said last week that more oil isn't needed. Bush asked producers to pump more crude during a visit to Saudi Arabia.
Oil fell 5.3 per cent to $90.90 a barrel this month, and the 13-nation group wants to prevent a further decline, the analysts said. A slowdown in the US, the world's biggest energy consumer, risks curbing demand for fuel as the end of winter in the Northern Hemisphere reduces consumption. "Opec would be shooting themselves in the foot if they increased supply," Michael Davies, head of research at Sucden (UK) Ltd in London, said.
Recession fears
Goldman Sachs Group Inc. and Merrill Lynch & Co. predict deteriorating growth in the US will spread to other nations. Japan, the world's third-largest oil consumer, has probably entered a recession already, Goldman's chief Japan economist, Tetsufumi Yamakawa, said.
The US dollar, used by Opec to price oil sales, weakened 12 per cent against the euro during 2007, eroding Opec's purchasing power. There's "no need for additional barrels," Hossein Kazempour Ardebili, the Opec governor for Iran said.
"There's a 60 per cent chance they'll increase production as the US is putting pressure on Saudi Arabia," Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterriech in Vienna, said. "If Opec does increase, prices could come down into the $80s."
"Opec is happy with the price above $80, and they clearly want to stop it going below $80," said Johannes Benigni, managing director of PVM Oil Associates in Vienna.
Forecast: Output may be cut
Opec may cut its oil output in March if stockpiles increase and demand dwindles, the Wall Street Journal said, citing unidentified ministers and officials.
The 13-member group may have a tough time this year deciding whether to boost or decrease production, the newspaper said. A US recession could curb the growth in global demand, yet China and the Middle East are still using more oil, the Journal said.
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