OPEC split over Saudi oil decision

Tag: oil processing

Saudi Arabia's increased oil production to counter the fears of inflation-hit consumers opened divisions within the Organisation of Petroleum Exporting Countries (OPEC) at an international summit on Sunday as the cartel battles pressure to find more crude.

The discord hides even wider international divisions over the cause of the doubling of the price of a barrel of oil over the past year to $140 per barrel.

'OPEC will not hesitate to make any increase in production if the market required that... for Kuwait, we will not hesitate to increase production if the market requires it,' Kuwaiti Oil Minister Mohammed al-Olaim told reporters, in support of the Saudi move.

Kuwait, OPEC's fourth largest producer, pumps around 2.58 million barrels per day.

But OPEC president Chakib Khelil opposed increased production. The group will not hold new talks before a regular meeting in September and doubts have been expressed about how much spare capacity the cartel has to meet any new demand.

Khelil, Algeria's oil minister, refused to answer questions about increased Saudi output, and other ministers dismissed the need for the summit.

'This meeting is going nowhere,' said Libya's Oil Minister Shukri Ghanem as he arrived in Jeddah. Venezuela was only persuaded to attend after a direct approach from the Saudi government.

'We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply,' Khelil told reporters.

'Why would you have a supply problem when demand is going down?' he asked.

'We believe speculation, in its noble and not noble terms, has its impact.'

The Kuwaiti minister pointed to similar suspicions. 'We believe that market fundamentals are not causing high oil prices. There are other factors like speculation, lack of refining capacity, the decline in the dollar and geopolitical factors,' he said.

Qatar's Energy Minister Abdullah Al-Attiya said the world oil market was well-supplied.

'As producers we affirm that there is no shortage of supplies and sometimes production exceeds consumption,' Al-Attiya told reporters. 'The question is: is the world facing a supply crisis and the answer is NO.'

'We have a lot of customers that we checked with and they believe that they are not in a position to buy more oil,' he said.