Gulf oil producers, already facing a weakening demand picture in 2011 and 2012, are expected to cut their output once Libya resumes production, OPEC's top official said Monday.
Gulf oil producers, already facing a weakening demand picture in 2011
and 2012, are expected to cut their output once
Libya
resumes production, OPEC's top official said Monday.
Secretary General Abdalla Salem el-Badri, a Libyan, told a forum here that
Libya
could
reach pre-unrest production levels within 15 months, as few key facilities were
damaged, and said he expects
Saudi
Arabia
and other Gulf countries to
cut output once
Libya
's
production recovers, although he hasn't had any individual confirmation.
"When
Libya
will
come to production, [Gulf] OPEC members will reduce their production...no doubt
about it," he said. "Right now I don't see anything, but as long as
Libya
starts to produce more and more I'm sure member countries will cut. It is in
their benefits."
El-Badri's comments come amid renewed concerns about the global economy. On
Monday light, sweet crude futures on the New York Mercantile Exchange for
delivery in October traded 1.6% lower at $86.58 a barrel at 0647 GMT, down
$1.38 in the Globex electronic session. Brent crude was also lower.
El-Badri said Monday he sees rising negativity in the oil market amid greater
concerns over weak
U.S.
growth, the European sovereign debt crisis and signs that the Chinese
government will act aggressively to prevent overheating of its economy.
"There are a lot of precautions," el-Badri told the Gulf Intelligence
energy forum. "Now we see that those negative elements are coming to the
market."
El-Badri said he was surprised that crude oil prices are holding at current
levels, which have a risk premium of $16-$20 a barrel priced in due to the
current conditions of the global economy and as Western stimulus packages fail
to generate jobs and economic activity.
The International Energy Agency and OPEC last week reduced their forecasts for
oil demand, although they differed on the outlook for Libyan crude. OPEC gave a
more optimistic prognosis for
Libya
and
suggested that individual producers could cut back.
El-Badri, a former Libyan energy minister and head of its National Oil Corp.,
said there is no answer yet as to whether he would return and work in
Libya
's oil
industry after his term as OPEC secretary general ends, but said it was safe
now for other oil experts to return to the country.
OPEC will recognize the National Transitional Council as
Libya
's
representative after the United Nations recognized it as the legitimate
government.
El-Badri also said he wasn't happy about the IEA's decision in June to release
of 60 million barrels of oil from emergency stocks to alleviate a shortage
induced by the civil war in
Libya
, but
said the IEA's new director had assured OPEC that it won't have any further oil
stock releases.
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