OPEC is unlikely to cut output at its upcoming meeting, Saudi Arabia's oil minister said in comments published Tuesday, as indications mounted that the oil producing bloc would resist a temptation to tighten the taps despite wanting higher crude prices.
The Saudi minister, Ali al-Naimi, also voiced concerns about global crude stockpiles, whose tenaciously high levels are being sustained by weak demand linked to the economic meltdown.
In an interview with the pan-Arab daily Al-Hayat ahead of Thursday's OPEC meeting in Vienna, al-Naimi said that unless those inventories drop, there would be no increase in output by the 12-member Organization of the Petroleum Exporting Countries.
Boosting production "will not happen until we are sure that global inventories are reduced to their normal levels," said al-Naimi, whose country is the world's largest exporter of crude.
He said world crude inventories are currently at between 61 and 62 days of forward cover and the group wants to see them down to 52 or 54 days.
Al-Naimi's remarks highlight the balancing act the group, which pumps almost 40 percent of the world's oil, is facing.
The U.S. benchmark light sweet crude futures contract was trading slightly below $61 per barrel Tuesday, or about $20 per barrel higher than its price when OPEC minister met in the Austrian capital in March to discuss whether additional production cuts were needed.
They held off, opting instead to stick with boosting compliance with an earlier 4.2 million barrels per day in reductions from September 2008 levels.
At this meeting, they appear likely to do the same, focusing on making sure that group members adhere to their quotas as a way to drive prices higher despite still weak demand.
In an interview published Tuesday in Kuwait's Al-Seyassah daily, Saudi Arabia's King Abdullah said the kingdom believes "a fair price is $75 or maybe $80 per barrel, especially for the time being."
Abdullah and al-Naimi have cited that level before as reasonable for both consumers as well as producer who need to be able to continue investments in their oil industry to meet an expected upswing in demand as the world recovers from its current recession.
Producers and analysts have voiced concerns that the current prices are discouraging new investments, meaning that supply will not be able to keep pace with demand going forward.
Al-Naimi repeated that warning in Rome on Monday, saying during a meeting of energy ministers from the Group of Eight industrialized nations that oil prices could again spike to even above last year's record high of almost $150 per barrel because of falling investments in the sector.
"If others do not begin investments in projects to boost strategic capacity, like the kingdom has done, then we will see another skyrocketing in prices, and it will continue this time for two or three years," al-Naimi was quoted as saying by the official Saudi Press Agency.