OPEC, the oil producers' group that pumps about 40 percent of the world's crude, risks oversupplying the market if it decides to hike output at a policy meeting this week, analysts said.
But leaving output quotas unchanged could send oil prices to fresh record highs and even above the psychological US$100-a-barrel mark for the first time, they said.
Member nations of OPEC will hold an official output meeting in Abu Dhabi on Wednesday, with uncertainty surrounding the outcome of their decision.
"With the economic problems hanging over the global economy now, OPEC is probably thinking that [oil] demand is more likely to go down than up in terms of current forecasts and they'll probably want to keep things steady" regarding output, said Simon Wardell, an oil expert for Global Insight, an independent analyst group.
Veronica Smart, an analyst at the Energy Information Centre consultancy, said that while OPEC would find it hard to justify doing nothing with production quotas should prices remain around US$90-a-barrel by the time of its meeting, the cartel was likely to keep output on hold.
"If OPEC did decide to increase production levels it probably wouldn't come into effect until January 1 or perhaps February 1 and it might be seen as a little bit too little too late," she said.
Such a decision would place extra oil onto the market towards the end of the northern hemisphere winter, when demand for heating fuel drops, and ahead of the second quarter when OPEC does not like to see a large build-up of inventories, Smart said.
"If OPEC decided to do nothing ... they probably would be some bullish [price] impact on the market," the analyst said. "You can argue that [no change to output] could be used to have a bull run to [US$]100."
World oil prices slumped last week on increasing speculation that OPEC may decide to hike crude output on Wednesday.
OPEC last decided to raise production in September when it agreed to provide an extra 500,000 barrels of crude a day to the market, which took effect on Nov. 1.
Although some OPEC ministers have expressed concern that expensive crude could also dampen demand for oil, they reject blame for the nearly triple-digit prices.
Instead the cartel argues they are the result of speculators being drawn to the market on geopolitical tensions, such as between crude-producer Iran and the US.
"There is a huge element of speculation in the market," Smart said. "However, the speculation is largely around supplies and if OPEC were producing perhaps slightly more, that would take some of the fear premium out of the market."
Saudi Oil Minister Ali Al-Nuaimi last Wednesday insisted the world oil market was well supplied and that high prices did not properly reflect the supply-demand situation.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
CRITICAL MOVE: TSMC’s plan to invest another US$100 billion in US chipmaking would boost Taiwan’s competitive edge in the global market, the premier said The government would ensure that the most advanced chipmaking technology stays in Taiwan while assisting Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in investing overseas, the Presidential Office said yesterday. The statement follows a joint announcement by the world’s largest contract chipmaker and US President Donald Trump on Monday that TSMC would invest an additional US$100 billion over the next four years to expand its semiconductor manufacturing operations in the US, which would include construction of three new chip fabrication plants, two advanced packaging facilities, and a research and development center. The government knew about the deal in advance and would assist, Presidential
RSS