Prices, demand may prevent OPEC cut
Vienna, February 1:
Strong global demand for oil and high prices fuelled by nuclear fears in Iran may keep Organisation of the Petroleum Exporting Countries (OPEC) from cutting its production levels for the entire year, despite calls by some producers to reduce supply.
The OPEC, which accounts for 40 per cent of global crude supplies, left its production ceiling at 28 million barrels per day (bpd) at a meeting in Vienna yesterday.
Oil heavyweight Saudi Arabia said no reduction is needed for the entire year because of growing demand.
But Venezuela urged OPEC to consider a production cut of up to one million barrels per day at its next meeting on March 8.
Robust economic growth in China and energy needs in the gas-guzzling US have been major reasons for a rise in global demand, which kept prices high. Problems in Iran and unrest
in Nigeria, the world’s fourth and sixth largest producers of crude respectively, also kept the market on its toes.
The International Energy Agency (IEA), which advises 26 countries on energy policy, estimated in a January report that global oil consumption will increase by 2.2 per cent in 2006 to average 85.1 million bpd.The organisation even said an anticipated seasonal fall in demand in April to June — at the end of the northern hemisphere’s winter — looked
The need for energyhas stayed strong in the second quarter over the past two years, including in 2004 when oil prices surged on the back of a 15 per cent increase in Chinese demand.
Last year, OPEC was forced to hike production in the second quarter instead of cutting as earlier expected.
“We fear a slow down of demand in the second quarter, but we were already proved wrong twice,” in the past two years, said Algerian energy minister Chakib Khelik yesterday.
Washington: President George W Bush called for a 75 per cent cut in US oil imports from the Middle East by 2025 to wean the US off its ‘addiction’ to energy from unstable regions.
In his annual State of the Union address to Congress, Bush announced federal spending to research new technologies for generating power and for switching vehicles to cleaner fuels. “Here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world,” he said. — AFP