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Saudi Targets Return...

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Saudi Arabia's Oil Minister Ali al-Naimi. Saudi Arabia on Saturday identified $75 a barrel as a "fair" world price for oil. (Reuters) Saudi Arabia on Friday identified $75 a barrel as a fair price for oil, the first time in years the world's leading crude exporter has cited a price target. Saudi Oil Minister Ali al-Naimi said oil prices needed to return to $75 to keep the more expensive new projects at the margins of world supply on track. "There is a good logic for $75 a barrel," said Naimi. "You know why? Because I believe $75 is the price for the marginal producer. If the world needs supply from all sources, we need to protect the price for them. I think $75 is a fair price." Naimi was speaking ahead of an OPEC meeting at 3 p.m. in Cairo (1300 GMT) to review progress on output restraints agreed in the past two months that aim to remove 7 percent of its supply from the world market. Ministers were expected to defer a further production cut until their meeting next month. His comments are likely to come as a relief to major oil consumer countries hoping OPEC will not seek to push crude prices back towards $100 barrel during a recession. Benchmark U.S. crude closed at just over $54 a barrel on Friday having peaked at $147 in July. The first priority for the Organization of the Petroleum Exporting Countries is to prevent prices, hit hard by a slump in fuel demand in the West, falling any further. Ministers were expected at Saturday's meeting to call for strict adherence to existing oil output curbs before considering tighter supply cuts when they meet next in Algeria on Dec. 17. "Compliance I think is OK," said Kuwaiti Oil Minister Mohammad al-Olaim. "But the market conditions require us to be 100 percent compliant." "This is a meeting to take stock, to understand what is happening in the oil market," Naimi said. "This is in preparation for a firm and resolute decision (in Algeria)." The deferral of tougher output restraints suggests Riyadh wants to be sure that others in the 12-member cartel are sharing the burden of the reductions. Naimi said that Saudi Arabia compliance with its share of the combined 2 million barrels a day (bpd) of cuts agreed in September and October was very high. But Saudi-owned al-Hayat newspaper quoted an OPEC source as saying that a lack of restraint by some countries was having a negative effect on oil prices. Shokri Ghanem, Libya's top oil official, said: "Compliance is less than we would like." Evidence so far suggests good if not total adherence with last month's 1.5 million bpd cut effective from Nov. 1, OPEC's biggest one-time cut since the world economy last faltered in 2001. Tanker-tracking consultancy Petrologistics estimated last week that OPEC output would fall by 1.22 million bpd in November. But the Petrologistics figures showed that nearly half of that reduction had been shouldered by Saudi Arabia, whereas Riyadh accounts for only a third of OPEC output. (Reuters)