QUITO–Leading OPEC producer Saudi Arabia said on Saturday it still favored a US$70-US$80 price range for oil, a restatement of a two-year-old policy that will be welcomed by consumer nations worried that rising oil prices may get out of control and hamper global economic recovery. Saudi Oil Minister Ali al-Naimi told reporters at an OPEC meeting in Quito: "US$70-US$80 is a good price." The comments came as the Organization of the Petroleum Exporting Countries agreed, as expected, to keep production restraints unchanged, despite a recent surge in crude prices to US$90 a barrel.
With OPEC's next meeting not scheduled until June 2, markets are likely to test Saudi Arabia's resolve to keep prices below US$80. "The real issue here is whether additional supplies will be added," said Lawrence Eagles, global head of oil research at JP Morgan in New York. "Minister Naimi said US$80 was the top end of the range; let's see if he follows up with higher supplies." US crude closed at US$87.79 a barrel on Friday having touched a two-year high of US$90.76 earlier in the week.
Saudi, OPEC's most influential producer, is likely to face opposition to any change in policy from other members who argue that demand is not strong enough to warrant more oil and that speculators are to blame for driving prices up. Price hawk Venezuela called for US$100 oil and said OPEC should not lift output again through the end of 2011. "We believe that the market should compensate high production costs. One hundreds dollars appears to be an adequate price," said Venezuelan Oil Minister Rafael Ramirez.
OPEC agreed its biggest ever supply curbs at the end of 2008 after a price collapse from US$147 to just over US$33 caused by a recessionary drop in fuel demand. It has not changed policy since. Many OPEC ministers say supplies are sufficient and that they will only open the taps to meet extra demand. "When you go to buy oil and you cannot find it, that's when OPEC will interfere and solve it." (Reuters)
