- The Washington Times - Tuesday, September 9, 2008

VIENNA, Austria | Kuwait’s oil minister thinks there is no need for OPEC to cut production, despite falling crude prices.

Mohammed Abdullah Al-Aleem’s comments come on the eve of a meeting of oil ministers from the Organization of Petroleum Exporting Countries, who will decide whether to reduce production or keep it at current levels.

He is part of an OPEC committee whose recommendations could weigh heavily in OPEC’s final decision on what to do about output.

Mr. Al-Aleem said that “for the time being … there is no need to cut production,” partly because of worries about slowing global economic growth. But at the same time, he argued Monday that supply was outpacing demand.

Senior oil officials from Iran and Libya said Monday there is too much crude on the market, adding that OPEC is reviewing whether supply exceeds demand before deciding whether to cut back production.

But the energy minister of the United Arab Emirates said OPEC’s policy of keeping the world oil market “well supplied” has not changed.

Minister of Energy Mohammed Bin Dhaen al-Hamli was also quoted by UAE’s state news agency as saying that crude oil stockpiles in heavily consuming countries are within recent average levels.

Mr. Al-Hamli added that decisions on production levels are based on whether the market is well supplied and the recent fall in prices shows that the earlier rise was “too high, too fast.”

Oil prices have fallen nearly 30 percent from their highs of almost $150 a barrel, prompting general concern among OPEC’s 13 members.

OPEC President Chakib Khelil seemed to support, at least in principle, the hawkish stance that current oil supplies are enough to satisfy global demand.

“Definitely, there is plenty of oil on the market, ” Mr. Khelil said upon arriving in Vienna, forecasting that by the end of 2008 or early in 2009, daily oil output would exceed demand by between 500,000 and 1.5 million barrels.

Asked what OPEC’s likely decision would be regarding output, Mr. Khelil said “all options are open.”

Just as top OPEC officials have done in the past, Mr. Khelil blamed speculators for large fluctuations in oil prices, rather than a scarcity of crude.

“What we are seeing now is that the inverse relation between the U.S. dollar and the oil price is verified,” Mr. Khelil said. “When [the oil price] went up, the dollar was going down and now that the dollar is strengthening, the oil price is going down.”

Iran, the group’s No. 2 producer, has been the most vocal proponent of tightening the oil spigots.

“We believe the market is oversupplied,” Iran’s oil minister, Gholam Hossein Nozari, told reporters, adding the ministers planned to make a decision on what to do about production after their review Tuesday.



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