Recovering oil prices appear to ease Opec tensions

Saudi Arabia's new energy minister rallied Opec support for maintaining production yesterday as a near-doubling of crude prices since January eased tensions among oil exporters.

Khalid Al Falih said the 13-member group should “encourage the rebalancing” of the market as prices recover from the worst crash in more than a decade.

However, he told reporters at the Opec meeting in Vienna that it was “premature” to try and restrict output, as demanded by some of the hardest hit exporters, when production growth was already declining and demand was responding to lower prices.

“We feel the market is rebalancing as we speak,” Mr Falih said.

Weaker Opec members, such as Nigeria and Venezuela, had called for more robust co-ordinated action to boost the price further as they face economic and political crises. But even they seemed content to put on a largely united front for the group.

Emmanuel Ibe Kachikwu, Nigeria’s oil minister, reflected the mood of the meeting, saying: “The market is doing good.”

Brent, the international benchmark, has soared 80 per cent since touching a low for the year in late January. It hovered around $50 a barrel yesterday.

West Texas Intermediate, the US benchmark that has soared almost 90 per cent since its low for the year, was trading just above $49.

Tensions between Iran and Saudi Arabia has raised fears Riyadh may increase production to pressure its rivals but Mr Falih said yesterday the kingdom had no intention of swamping the market and would not go on a "flooding campaign".

While no formal agreement on production was reached, as expected by analysts, this week’s meeting in Vienna has been notably more amicable than the prior two gatherings of ministers that have both ended in open discord. – (Copyright The Financial Times Ltd 2016)