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(Center): Kuwait’s Deputy Prime Minister and Minister of Oil Mustafa Al-Shimali with the Kuwaiti delegation at the 164th Conference of Organization of Petroleum Exporting Countries (OPEC) in Vienna. (KUNA)
Kuwait’s Al-Shimali welcomes OPEC decision Cartel alert to risk of lower oil prices in 2014

VIENNA, Dec 5, (Agencies): President of the 164th Conference of the Organization of the Petroleum Exporting Countries (OPEC) and Kuwaiti Deputy Premier and Minister of Oil Mustafa Al-Shimali welcomed Wednesday the conference decision to maintain oil output ceiling. “Retaining the current oil output celling of 30 million barrels per day will meet the global market demand for oil and accommodate the expected increases from Iran and Iraq,” Al-Shimali told KUNA after the conclusion of the OPEC 164th Conference.
He added that OPEC, through this decision, seeks to maintain oil market equilibrium. Al-Shimali suggested $100 per oil barrel is a fair price for both producers and consumers. He estimated current average price of OPEC crude basket at $105 per barrel, expecting it to continue around this price till the coming OPEC meeting on June 11, 2014. OPEC Secretary General Abdalla El-Badri echoed a similar view in statements to KUNA.


“Keeping production at current level goes in harmony with the oil market developments as well as the supply and demand projections,” El-Badri told KUNA. He asserted that the decision was taken upon recommendations from the technical committee of the oil cartel. He underlined that OPEC is committed to maintain the stability of the global oil market. World oil prices could head lower next year as higher OPEC output coupled with increased shale production risks oversupplying the market despite upbeat Asian demand for crude, according to analysts. The Organization of Petroleum Exporting Countries (OPEC) on Wednesday agreed to hold its crude production ceiling at 30 million barrels per day, citing the current balance between world oil supply and demand following a meeting in Vienna.


Falls
But OPEC production could increase in the coming months as Iraq and Iran look to export more crude after sizeable falls in recent years. Libyan oil supplies may also recover from a current plunge in output.
The cartel, with a dozen member nations from the Middle East, Africa and Latin America, pumps out about one third of the world’s oil, with the bulk coming from top crude producer Saudi Arabia.
OPEC on Wednesday said that “although world oil demand is forecast to increase during 2014, this will be more than offset by the projected increase in non-OPEC supply” amid a boom in oil and gas being extracted from North American shale rock.
OPEC secretary general Abdullah El-Badri refused to be drawn on the prospect of lower oil prices caused by higher output, telling journalists that the group would simply wait to see if an oversupply situation occurs.
Analysts said that while higher supplies could push down benchmark oil prices currently trading at an average of $100 a barrel — in turn weighing on OPEC revenues — solid demand would continue to lend support.


“I still see (Brent oil) prices ranging between 95 and 115 dollars for most of the next year,” Jason Schenker, chief economist at consultants Prestige Economics, told AFP.
“The global economy is improving modestly and global oil demand growth is poised to rise especially with improvements in emerging markets next year and 2015.”
Schenker meanwhile pointed to the possibility of “a lot more oil coming on the market” should economic sanctions be lifted on Iran.
The country’s Oil Minister Bijan Zanganeh said this week that Iran would be able to “immediately” export 4.0 million barrels per day (bpd) once sanctions are lifted in the wake of the international deal to roll back its nuclear programme.


Iranian crude oil exports have been slashed to about 1.2 million bpd from 2.5 million bpd in 2011, according to Zanganeh.
Capital Economics research group noted: “The upshot is that we expect increased production from shale and Iran, combined with a weak economic recovery, to drag oil prices to $90 by the end of the (next) year.”
Badri said OPEC could accommodate US shale output, currently at 2.7 million bpd and set to rise further, but admitted cartel concerns regarding the rival production.
Gary Hornby, an analyst at energy consultants Inenco, said that New York crude prices could be weighed down additionally by high stockpiles of US crude.
“Oil prices do have more room to fall in 2014, and the general view of the market is that oil prices should be lower on average next year,” he said.


Independent energy expert Cornelia Meyer said lower crude futures were not a certainty.
“I’m very sceptical because we will still see Asian economies growing,” she told AFP.
“I’m very sceptical that this big increase (in output) is really coming because when I look at Iraq, the increase is going to be much smaller because the security situation is not there.”
Iraq’s Oil Minister Abdelkarim al-Luaybi this week said his country hoped to export 3.4 million bpd of crude oil next year, including 400,000 bpd from Iraqi Kurdistan, as it looks to recover from years of bloodshed.
This compares with exports of 2.38 million bpd in November.
Libya’s oil minister Abdelbari al-Arusi said he hoped the north African nation’s production would be back to its normal level of 1.5 million bpd within two weeks after plunging to about 250,000 bpd amid deadly fighting between radical Islamist fighters and the army.
 

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