The EU’s economic woes may weaken global demand for crude oil, Iranian OPEC Governor Mohammed Ali Khatibi said, according to the Iranian Ministry of Petroleum’s news Web site, Shana.
Crude producers and consumers are satisfied with current prices, Khatibi said in comments posted on the Web site on Saturday. OPEC is scheduled to meet in Vienna on Wednesday to set review output and set targets for next year.
OPEC, which supplies one-third of the world’s crude, is on Wednesday set to maintain its official output target of 24.84 million barrels per day — where it has stood for almost two years.
However, with the International Energy Agency estimating that actual OPEC production, excluding Iraq, stood at 27.32 million barrels per day in October, the organization may decide to issue a statement promising stricter compliance to its quotas.
The Vienna-based cartel meets periodically to set production levels, hoping that its decisions result in favorable market oil prices for its dozen members, which include current OPEC president Iran, oil kingpin Saudi Arabia, Libya, Nigeria and Venezuela.
OPEC Secretary-General Abdullah el-Badri last week said that current oil prices of about US$100 a barrel were “satisfactory,” adding that crude supply was adequate — indicating that its official output ceiling would stay on hold.
On Friday, Brent North Sea crude was trading at US$107.79 a barrel, while New York’s light sweet stood at US$98.11.
Despite economic turbulence and a pickup in Libya oil output after recent war ravaged its production, crude futures have managed to remain at relatively high levels thanks to geopolitical unrest across the oil-rich Middle East.
All eyes at Wednesday’s gathering will be on Iran, OPEC’s second-biggest oil producer after Saudi Arabia, and whose oil sector is at threat from potential EU sanctions over the Islamic republic’s controversial nuclear program.
EU foreign ministers have slapped sanctions on an extra 143 firms and 37 individuals in Iran, after the publication last month of a report on the country’s nuclear sector by the International Atomic Energy Agency.
The ministers also threatened to “extend the scope” of punitive action to strike at Tehran’s economic heart, saying the EU would examine measures targeting the financial system, energy and transport sectors by late next month.
“Assessing the fallout from the Iranian sanctions, OPEC meets with a complex economic, fundamental and political backdrop,” Barclays Capital analyst Sudakshina Unnikrishnan said.
“The geopolitical context has deepened” since OPEC’s last meeting in June, she added.
Iran and Venezuela are seen as OPEC’s traditional hawks, regularly calling on the cartel to cut production to boost oil prices and consequently their revenues.
However, last week, Venezuelan President Hugo Chavez said current prices were at a “fair” level.
“The talk in town is that the price hawks are not minded to rock the boat and current production levels will continue through next year,” PVM oil analyst David Hufton said.
“The OPEC hawks appear willing to accept whatever recommendation is put forward by their secretariat, no doubt comforted by a price level that has stabilized at over US$100 a barrel and in the knowledge that global stock levels have eroded considerably in the second half of this year,” he added.
However, Commerzbank analyst Eugen Weinberg said that there was still “potential for conflict” at the meeting because Libya was rapidly increasing its oil output.
Current Libyan output is “likely to make calls among hawks like Venezuela and Iran to cut back production louder,” he said.
El-Badri, addressing the World Petroleum Congress in Doha last week, said he expected Libya to return to full pre-war oil production levels by the middle of next year.
Libya was pumping out about 1.6 million barrels per day before the eight-month rebellion against former Libyan leader Muammar Qaddafi, who was captured and killed in October.
According to Libya’s National Oil Corp, the country is currently supplying 600,000 barrels per day after production hit a virtual standstill during the conflict.