Top oil exporter Saudi Arabia may have to persuade other members of the Organisation of the Petroleum Exporting Countries (Opec) to cut output to keep oil prices above $100 a barrel for the rest of the year, according to the kingdom’s largest unlisted lender, National Commercial Bank.
Opec members, which are responsible for 40 per cent of global oil supply, will need to make the cuts in the second quarter of this year and bring production to the current official target level of 30 million barrels a day, the Jeddah-based bank said in an emailed note.
“While Saudi Arabia has been willing to make large cuts to production in the past, its resolve to continue will be tested if other Opec members raise their own production during 2013,” the bank said.
The move “may prove to be a more difficult proposition than if the Kingdom were to act unilaterally as in the recent past.”
Total Opec output rose by 280,000 barrels a day in April to 30.46 million barrels a day, according to secondary sources cited by the group’s latest monthly report, led by higher output in Saudi Arabia and Iraq.
The group, which will meet in Vienna this week to discuss crude production levels, this month raised its strongest concerns this year about the potential weakening of Chinese oil demand and warned of the need to closely monitor market developments, particularly regarding the Asian country.
Opec members already face several challenges, including mounting pressure on their domestic budgets due to higher social spending and competition from rising shale oil production in the US
Opec’s coming output decision has been given extra significance by the sharp slide in oil prices to below $100 a barrel last month — a level many members say is the minimum fair price for their exports.
