‘No need to cut oil production’

New Delhi, January 17:

Saudi Arabia’s oil minister said there was no need for further production cuts by OPEC despite declining crude prices, adding that the global market “was moving in the right direction.”

Ali Naimi’s comments on Tuesday came amid speculation that the 12-member Organization of Petroleum Exporting Countries could call an emergency meeting to discuss further cuts in production to keep global oil prices from falling further.

But asked if he felt an emergency meeting was necessary, Naimi told reporters in Delhi: “Not at this time.” The news pushed crude oil prices to 19-month lows Tuesday, with the February contract closing at $51.21. Prices rebounded slightly in Asian electronic trading early Wednesday. Crude oil prices have tumbled 16 percent so far this year in a sell-off triggered by the warm winter in the northern U.S., a key market for heating fuel. The United States is the world’s biggest oil consumer.

OPEC members said late last year they would reduce their output by 1.2 million barrels a day and plan to cut production by another 500,000 barrels a day beginning February 1.

“I think the market is moving in the right direction,” Naimi told reporters in New Delhi, where he is attending an international conference organized by India’s oil ministry. “The situation in

the markets is far better than what it was when we met in Doha” and decided on the earlier round of cuts. Naimi insisted OPEC has succeeded in managing oil inventories well. The comments highlighted divisions within OPEC on whether the cartel needs to act now to try to put a floor under oil prices.

On Monday, Venezuela’s Energy and Mines Minister Rafael Ramirez said his country is pushing for an emergency OPEC meeting ahead of its scheduled gathering in March, and that some members backed this idea.

Meanwhile, Yemen, which is not a member of the OPEC, said its economy would be hurt if crude prices slip further. The country’s oil minister, Khalid Mahfoudh Bahah, said his government’s budget has factored in crude prices averaging at $55 a barrel this year.

Yemen currently produces 426,000 barrels a day. “Current prices are acceptable. If (the average) goes below $55 that will affect our economy,” he told reporters on the sidelines of the energy conference in New Delhi.