The cartel of oil exporting countries pumps over a third of the world’s oil and has already curbed output this year by 1.2 million barrels a day, or four per cent, in October to halt a 10-week, 25 per cent price slump.
As recently as last week, there was little doubt that a further cut of at least 500,000 barrels per day would follow from January 1. But with oil above $60 and consumer nations on edge, the mood has shifted in some delegations towards a delay.
US oil stood at $61.67 on Thursday. The oil ministers of Qatar and Indonesia said on Thursday that supply cuts of 300,000 bpd to 500,000 bpd were under discussion, but gave no timeframe.
Rafael Ramirez, he Venezuelan energy and mines minister, put the figure at 500,000 bpd. Opec ministers agree that the market is oversupplied – stocks in the United States, the biggest
consumer, are the highest since 1998 for the time of year – but they want to get their timing right.
Cut too soon and prices could spike. Delay and prices could fall sharply in the second quarter as demand slackens.
Sheikh Ali al-Jarrah al-Sabah, the Kuwaiti oil minister, said: “We are satisfied with the decision we took [in October] in Doha.”
Consumer stocks are high, but they are in decline.
Inventories in the OECD group of industrialised countries fell 40 million
barrels in October, the International Energy Agency said on Wednesday, and the trend continued in November.
The opinion of leading exporter Saudi Arabia is crucial. Ali Al-Naimi, the Saudi oil minister, has said the market is in better shape now than when ministers last met. He estimated that Opec had succeeded in removing half the excess 100,000 million barrels.
“The fundamentals of the market are much better than they were in October,” he said. “We probably have a little work to do to make it an even better, more stable market.”
Sam Bodman, the US energy secretary, and Claude Mandil, the head of International Energy Agency, IEA, have called on Opec to wait before making further supply reductions.
The IEA, adviser to 26 industrialised countries, said in its monthly report on Wednesday that Opec cuts from November 1 were making themselves felt, “cold comfort for a risk-prone global economy already facing another winter with high oil prices”.
Oil has fallen from a mid-July peak of $78.40, but is still three times the price at the start of 2002 as Asian demand kicked in. Refining constraints and worries over supply from Iraq, Nigeria, Iran and Russia helped fuel the rally.