Saudi Arabia is on course for a showdown with its fellow Opec members at this week’s meeting of the global oil cartel after it called for a higher output target despite the drop in crude prices.
“Our analysis suggests that we will need a higher ceiling than currently exists,” Ali Naimi, Saudi Arabia’s oil minister, said in an interview with the Gulf Oil Review.
Oil prices have fallen sharply from a four-year high of $128 a barrel in March to about $100 amid concerns about the euro zone debt crisis and the slowdown in the global economy. Fellow Opec member Iran has blamed Saudi Arabia, Kuwait and the United Arab Emirates for the price drop, accusing them of producing too much oil.
Opec, which supplies 40 per cent of the world’s crude oil, normally responds to a sharp drop in prices by curbing production. However, Saudi Arabia’s current policy is to prevent crude rising much higher than $100 a barrel in order to mitigate the risks that high oil prices pose to the global economy.
Opec has a daily production ceiling of 30 million barrels.
– (The Financial Times)
