Opec pumping hard to ‘bring oil price down’

Reuters/Paris

The 12-member Organisation of the Petroleum Exporting Countries is pumping 32.3mn bpd

Opec is working hard to bring down oil prices that jumped towards $130 a barrel earlier this year, its secretary general said yesterday, and is pumping much more than its official target even as exports from member Iran dwindle. Oil surged in March to $128 a barrel, the highest since 2008, as increased concern over the loss of Iranian oil due to tighter sanctions combined with supply hitches elsewhere. “We are not happy with prices at this level because there will be destruction as far as demand is concerned,” Opec secretary general Abdullah al-Badri told an energy conference. “We’re working hard to bring down the price. We’re not comfortable.” Qatari Oil Minister HE Dr Mohamed bin Saleh al-Sada, also attending the conference in Paris, warned oil would head ever higher unless trillions of dollars are invested in the energy sector. Gulf producers will have to stump up $100bn a year over the next 25 years to meet future demand, out of total investment of $19tn, he said. “If these investments are not achieved by 2016, the price will rise to over $150 in real terms,” he predicted. The 12-member Organisation of the Petroleum Exporting Countries is pumping 32.3mn bpd, al-Badri said, citing figures given to Opec by member countries. That is 2.3mn bpd more than Opec’s target of 30mn bpd and higher than a Reuters estimate of Opec output in April published this week. Al-Badri again identified $100 as a comfortable price - a level endorsed by top Opec producer Saudi Arabia in January - and said the price was being driven higher by speculators. “There has been no shortage of oil in the market. Producers have been able to meet consumer needs,” he said. “We also see this as being the case for the rest of 2012 and the foreseeable future.” “Today the price continues to be driven by excessive speculation,” al-Badri said. The extra Opec oil is filling gaps caused by an unusually large number of supply outages globally. Supply breaks were running at nearly 1.3mn bpd as of early April. It has also offset a decline in exports from Iran, which is facing stiffening western sanctions over its disputed nuclear energy programme. Iranian oil exports were running at between 200,000 bpd and 300,000 bpd below last year’s level, Maria van der Hoeven, head of the International Energy Agency, told yesterday’s conference. Iranian officials have said the country exported an average of 2.2mn bpd last year. The IEA, adviser to 28 industrialised countries and manager of their emergency oil stockpiles, last year tapped its members’ strategic oil reserves to cover shortages caused by the loss of Libyan exports. There could be a case for releasing stocks if an unexpected event occurred, as with the civil war in Libya, although there is no reason currently to do so, given that the market is well supplied, Van der Hoeven  said. “At this moment, although prices are relatively high, it’s not the case,” she said. “You can use this instrument only once ... so timing and circumstances are very important.” Al-Badri’s figure of 32.3mn bpd for Opec production is even higher than a Reuters estimate of 31.75mn bpd for Opec output in April - the highest since 2008. Opec in December set the target at 30mn bpd, settling an argument that broke out in 2011 after Iran and other members opposed a Saudi-led plan to raise the production ceiling. Output has remained above the target all year as Libyan supply has recovered. While supply may be ample at present, forecasters such as the IEA have for years been urging oil-producing nations to vastly expand investment in order to meet rising future demand.