CAIRO – The global economy can withstand an oil price of $100 a barrel, Kuwait’s oil minister said, as other exporters indicated global production was unlikely to rise in 2011 because the market was well supplied.
Analysts believe that oil producing countries are likely to raise output after crude rallied more than 30 percent from a low in May because they fear prices could once again damage economic growth in fuel importing countries. European benchmark ICE Brent crude for February closed at $93.46 on Friday after hitting $94.74 a barrel, its highest level since October 2008. But Arab oil exporters meeting in Cairo this weekend said that they saw no need to supply more crude as stocks were high and prices had been inflated temporarily by cold weather in Europe.
Asked by Reuters if the world economy could stand a $100 oil price, Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said, “Yes it can.” Iraq’s new oil minister and the head of Libya’s National Oil Corporation told Reuters that $100 was a fair price, while Qatar’s Minister Abdullah al-Attiyah said he did not expect OPEC to increase output in 2011.
“I do not expect an OPEC meeting before June because oil prices are stable,” he said. Some ministers even called for exporters to comply better with agreed production limits. OPEC members’ compliance with promised cutbacks reached 56 percent in November, according to Reuters estimates. When asked if output could be raised, Kuwait’s Sheikh Ahmad said: “No. More compliance, more compliance.”
OPEC’s most influential oil minister, Saudi Arabia’s Ali al-Naimi, said on Friday he was still happy with an oil price of $70-80 a barrel and there was no need for an extra OPEC meeting before the next scheduled one in June. Others in the group have been pressing for a higher price, arguing that quantitative easing and a weakened US dollar.
DXY that spurred gains across financial markets mean the oil price strength is partly nominal. Analysts say oil could continue to rally in 2011 as confidence about the global economic recovery picks up and inventories fall. For now, said United Arab Emirates Oil Minister Mohammed al-Hamli, the inventory level “is quite high. It’s the highest over the five years average. The market is well supplied.”
