THE EVENT -
Two senior OPEC delegates said they see the group holding current output policy unchanged at its last meeting of the year in Abu Dhabi Wednesday, opting instead to meet again in January to review market conditions. Any decision still needs to be ratified by the full OPEC group and is subject to change. Options for the Organization of Petroleum Exporting Countries on the table include the cartel holding steady - risking the ire of the U.S. and other major energy consumers hoping for relief from high oil prices - to a possible half a million barrels a day increase in supplies to show it isn't deaf to those complaints. With oil prices declining toward less than $88 a barrel, a gloomy economic outlook in the U.S., and with the potential for tension with Iran to decline in light of new intelligence reports, the current sentiment from among many ministers and aides is against any change to current production levels.
-WHY IT MATTERS-
It is often said that OPEC faces a tricky balancing act. This week may be one of its most challenging in years. Oil near $100 a barrel is fresh in the minds of consumers, catapulted there with the help of the weak dollar and speculative investors. There are yelps of pain from oil-hungry countries facing inflation caused in a large part by energy costs. Yet the sustainability of oil demand growth is in doubt, with the global credit crisis likely to play out into 2008, and with higher oil flows spilling over from rival producers to the cartel. Burned once before when it raised output just before the 1997 Asian financial crisis and watched oil prices then plunge from $20 to $12 a barrel, the cartel won't want to make the same mistake again this week. A rapid price loss of more than $10 a barrel since late November may crimp any moves to assuage consumer worries.
-THEY SAID IT-
"Iran's position is very clear on this. We don't think there should be an increase. I call on OPEC countries not to increase production during its meeting this week." - Iranian President Mahmoud Ahmadinejad
"That is very premature...we have to meet and then decide. The field is wide open." - Saudi Arabia's Oil Minister Ali Naimi.
"Yes, we have concerns but we still need to go through all the data." - Naimi on the credit crunch and other economic headwinds.
"We'll either rollover or increase by 500,000 barrels a day in order to remove OPEC's name from being a reason for increased oil prices." -Delegate
"If they don't raise output, prices will probably stay at about $90 a barrel. If they raise it by 500,000 barrels a day, the price could go to between $90-$85." - Thina Salvedt, Nordea Bank
"If the CIA report on Iran is genuine, it will bring stability to the region and ease oil prices. I expect prices to reach $70 by the end of the first quarter 2008 with this news." - Kamel Al-Harami, Kuwait-based independent oil analyst
-TOP STORIES- OPEC HEDGES BETS AHEAD OF POLICY MTG, "All OPTIONS ARE OPEN"
Oil traders anxiously peering into their OPEC crystal balls Tuesday were left wanting, with Saudi Arabia's powerful oil minister Ali Naimi continuing to argue that all policy options were on the table. A large drop in benchmark crude futures has convinced some observers that the group may opt to hold current production unchanged when meets in Abu Dhabi, as it continues to survey winter demand across much of the industrialized world, preferring to defer any decision on changing output until perhaps early next year. But OPEC heavyweight Saudi Arabia has yet to tip its hand and an OPEC delegate said the cartel is still evaluating whether to increase oil supply by 500,000 barrels a day or hold steady in the wake of the slide in oil prices.
AHMADINEJAD: IRAN OPPOSES OPEC PRODUCTION INCREASE
Iran opposes an increase in oil output by OPEC member countries, President Mahmoud Ahmadinejad said Monday. "Iran's position is very clear on this," Ahmadinejad said, speaking on the sidelines of the Gulf Cooperation Council meeting in Doha. "We don't think there should be an increase. I call on OPEC countries not to increase production during its meeting this week."
OPEC SEES '08 NEED FOR ITS OIL 0.6M-1M B/D BELOW 07
The implied daily need for crude from OPEC is seen falling by between 600,000 barrels and 1 million barrels next year against this year, a delegate familiar with the data said Tuesday, with rising supply from producers not part of the cartel flooding in. The delegate added that production of liquids associated with natural gas would also suggest the call-on-OPEC, as it is known, would be lower than experienced this year. ]
OPEC NOV OIL OUTPUT +280,000 B/D ON MO AT 31.5M B/D
OPEC pumped more crude oil in November, the Dow Jones Newswires output survey showed Monday, helping depress prices and amid expectations that it may boost output further this month to battle a potential looming economic recession. The survey estimates 12 members' daily production in November, when it raised its output goal by half a million barrels a day, rose almost 1%, or 283,000 barrels, against the previous month to 31.51 million barrels.
OPEC SECY GENL DISMISSES TALK OF OIL CURRENCY BASKET - WAM
OPEC Secretary General Abdalla Salem el-Badri reaffirmed Tuesday that the cartel doesn't want to price oil against a basket of currencies, which he said was an issue for individual members rather than the group. In an interview with the state-run Emirates News Agency, el-Badri said: "The group does not seek that mechanism and the issue is left to members states."