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January 28, 2013 5:26 pm
Opec has struck an an upbeat tone about the oil market for this year, anticipating prices of around $110 a barrel on average for 2013.
Abdalla El-Badri, Opec secretary-general, added that the oil cartel, which accounts for 40 per cent of global oil supplies, would probably keep its production stable for the time being, after member countries cut output in November and December.
“As of now I think the situation is really improving,” he said. Speaking about the outlook for the oil market, he added: “When I see growth in China is improving, growth in India is improving, when I see growth in the US is improving, I think that unless something dramatic happens in 2013, it will be a repetition of 2012.”
Brent crude oil, the global benchmark, set a record annual average in 2012 of roughly $111.5 a barrel.The benchmark closed at or above $100 every trading day last year, bar 24 days in late June and early July.
Weak global growth and increased domestic oil production in the US, traditionally Opec’s largest customer, have led some analysts to forecast downward pressure on the price of oil this year, as well as an erosion of Opec’s ability to influence prices.
Saudi Arabia, Opec’s largest producer, cut production to its lowest in a year in December. The kingdom supplied more than 10m barrels a day in mid-2012 to meet a seasonal increase in demand and offset the loss of Iranian production. But it has since cut output to 9.3m b/d, according to the International Energy Agency.
But Mr El-Badri denied Opec was reducing production to accommodate increased US supply, and said the organisation welcomed increased diversity of supply.
“US unconventional production is evolutionary for the market not revolutionary,” he said. “Forecasts suggest 3m b/d in 20 years – that is not a threat to us,” he said on the sidelines of an oil conference organised by Chatham House, the London-based think tank. Between them Opec countries produce around 37.5m b/d.
Mr El-Badri also signalled a more relaxed approach to enforcement of member production quotas. Even after Saudi Arabia’s production cut in December, Opec members still exceeded their 30m b/d quota for crude oil by 400,000 b/d.
While repeating the official line that “no country should exceed their quota”, Mr El-Badri said of the 30m quota: “This a sign, you know.”
He added that Opec was not looking to cut production further while some countries continued to struggle. “We don’t see the need [when some countries] are really not in a good shape.”
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