Saudi Arabia rejects Opec output cut despite Iran call

The Organisation of the Petroleum Exporting Countries is meeting today in Vienna at a time of stubbornly high oil prices, fuelled by instability fears in key producers Iran and Nigeria.

A majority of the 11-member group, which pumps about 40 per cent of the world’s crude oil, has already indicated a desire to keep the output ceiling at a near 25-year-high of 28 million barrels per day (bpd) for now.

Asked whether there was a reason to cut production on Tuesday, Saudi Oil Minister Ali al-Naimi, whose country is the world’s biggest producer of crude, said: “Absolutely not”.

Kuwaiti Energy Minister Shaikh Ahmad Fahd al-Sabah, who has decided against attending the meeting at Opec’s Vienna headquarters, joined the growing chorus of voices supporting no change.

“I think that now, with such high prices, which have become nearly a record, we (Opec) should not reduce our production, despite the huge surplus,” Shaikh Ahmad told reporters in Kuwait City on Sunday.

Political turmoil in Kuwait following the death of its amir earlier this month also helped push up the price of oil close to a record high of 70.85 dollars a barrel, which was set at the end of August.

A barrel of light sweet crude oil closed on Friday in New York up 1.24 dollars at 67.5 dollars.

Among the ministers who have been arriving in Vienna since Saturday, Algerian Energy Minister Chakib Khelil also looked keen to keep the status quo.

“For this meeting I think we should leave things the way they are,” he told reporters upon his arrival.

Nigeria, Venezuela, Indonesia and Iraq hold the same stance.

Only Iran, the fourth largest oil exporter in the world, has spoken out in favour of trimming output by one million barrels per day at Tuesday’s meeting.

Analysts note, however, this stance may be linked to a desire by Teheran to use its energy weapon against the West amid a standoff with the European Union and the United States over the country’s nuclear programme.

Attention will be focused on Iranian Oil Minister Kazem Vaziri-Hamaneh, who is due to arrive in Vienna early on Monday morning, to hear his latest views.

A decision by Teheran to resume uranium enrichment activities, which Washington suspects is a cover for a nuclear weapons programme, has triggered a meeting of the UN nuclear watchdog on Thursday also in Vienna.

The International Atomic Energy Agency is expected to consider the possibility of referring Teheran to the Security Council.

Another main factor keeping prices high has been a series of attacks against oil installations in Nigeria, the world’s sixth largest exporter of oil.

As a result, production in the country has been cut by more than 220,000 barrels per day.

Despite growing calls for production levels to be held tight, the Opec group may still decide to lower overall production at a later date, such as the second quarter.

By this time, the cold winter months in the northern hemisphere will have drawn to a close, reducing demand for energy and lowering prices.

Opec is due to meet again on March 8.

Indonesia’s Energy Minister Purnomo Yusgiantoro will not be attending this week’s meeting, Opec’s secretariat said. It also looked very doubtful that Iraqi Oil Minister Ibrahim Bahr Al-Ulum will make an appearance.