VIENNA: Saudi Arabia is satisfied with current crude prices as well as global supply and demand levels, Petroleum and Mineral Resources Minister Ali Al-Naimi said, indicating OPEC will freeze its output ceiling.
“The market is in the best position it can be,” Petroleum and Mineral Resources Minister Ali Al-Naimi said in Vienna ahead of a meeting of the Organization of Petroleum Exporting Countries to decide on production.
“Demand is great, economic growth is improving,” said Al-Naimi, who represents the world’s biggest producer of crude oil.
Brent crude edged up toward $112 a barrel in quiet trade on Tuesday, close to a three-month high hit in the previous session.
Brent prices rose almost 2 percent on Monday.
Brent crude for January delivery was up 30 cents at $111.75 a barrel at 1432 GMT, after touching $112.34 a barrel in the previous session, the highest since Sept. 13.
US crude, also known as West Texas Intermediate or WTI, was up 36 cents at $94.18 a barrel, after settling up $1.10 on Monday.
Brent’s premium over WTI slipped slightly to $17.57 a barrel.
OPEC’s dozen member nations from the Middle East, Africa and Latin America together produce about one-third of the world’s crude and have an output ceiling of 30 million barrels per day — slightly above current production.
“Supply and demand are in equilibrium, inventories are in a good position,” Al-Naimi said in the Austrian capital, where OPEC is headquartered.
“We are at the right price right now…. The price is market-decided. We’re happy with whatever the market determines,” he added.
Saudi Arabia argues that current prices averaging $100 per barrel provide acceptable income for producers without weighing too heavily on consumers.
Asked if OPEC should cut output amid the prospect of increased exports from Iran in the wake of the country’s recent nuclear deal, Al-Naimi said: “Why cut? Demand is there.”
Energy-monitoring organization the International Energy Agency predicts that demand for OPEC crude will drop to 29.10 million barrels per day next year from 29.89 mbpd currently — amid Libyan unrest and increased competition for the cartel’s oil.
Libya’s output has plunged to around 250,000 bpd compared with its usual production of 1.5 million amid deadly fighting between radical Islamist fighters and the army.
Additionally, OPEC is facing increased competition from shale energy, and has itself said that take-up of the group’s oil will drop periodically until 2017, before rebounding slightly in 2018.
The boom in gas and oil extracted from shale rock found around the world, but especially in North America, has slashed energy costs for many consumers.
OPEC meanwhile maintains that it has a key role to play in meeting the world’s thirst for crude oil.
Pumping about 35 percent of the world’s crude, the cartel will also decide in Vienna on whether to replace Abdullah El-Badri as secretary general.
Saudi Arabia is battling against Iraq and Iran for the position of succeeding El-Badri, who has steered the cartel through the financial crisis in the role of administrative head since 2007.
OPEC voted last December to re-appoint the Libyan for another year after members failed to agree on a new secretary general.