OPEC: No shortage of crude oil in market
OPEC is worried about the recent surge in global oil prices and its potential impact on the world economy, but the market is oversupplied...
The Associated Press
CAIRO — OPEC is worried about the recent surge in global oil prices and its potential impact on the world economy, but the market is oversupplied, several oil officials said Monday, suggesting the bloc will not raise its output at its June meeting.
Oil prices have spiked sharply over the past few months, surging on concerns that the unrest ravaging the Arab world, including Organization of the Petroleum Exporting Countries member Libya, will affect output from a group that supplies about 35 percent of the world's crude. The gains have stoked fears that they could squeeze the global economy.
OPEC acknowledged those concerns but said the increases that briefly pushed oil futures as high as $127 per barrel were driven mainly by speculation.
While the world economy is better off than it was two year earlier, the recovery is "patchy," Saudi Arabian Oil Minister Ali Naimi said, addressing an oil meeting in Kuwait.
Naimi said that some countries still suffer from "unacceptable" unemployment levels while others are struggling with concerns about their financial institutions. The comments were carried by Kuwait's official KUNA news agency.
OPEC ministers have said there is little they can do at present to lower prices, arguing that markets were oversupplied and that the recent gains were largely driven by speculation.
Saudi Arabia had stepped in to offset some of the production lost from the near shutdown of Libyan oil production amid the violence in the North African nation.
But Naimi said his country — OPEC's de facto leader — had cut daily output to 8.3 million in March from 9.1 million barrels in February due to what it sees as excess supply.
He was quoted by the official Saudi Press Agency as saying that output will likely rise again in April. The country has an output capacity of 12.5 million barrels per day.
The 12-nation bloc's secretary-general said that OPEC's output last month was equal to the bloc's production in December, despite the halt in Libyan supply.
The surge in prices has been a boon to OPEC members, many of whom rely almost overwhelmingly on oil exports for their government budgets.
But the group has also been cautious in its approach to the market.
In a bid to avoid unsettling the global economic recovery after the world's financial crisis, it has yet to officially revise its output quotas since a series of cuts more than two years ago that lowered their targets by 4.2 million barrels per day. Compliance with those cuts has since waned.
Separately, Kuwait's Cabinet decided on Monday to contribute 5 million barrels of crude oil and refined products to help Japan deal with the aftermath of the massive earthquake and tsunami that hammered the Asian nation last month, KUNA reported.