Saudi Arabian Oil Minister Ali al- Naimi said he’s “absolutely fine” with the adherence to OPEC production quotas by member states as the group meets in Vienna this week to discuss output policy.
“I’m happy with compliance,” al-Naimi told reporters today in Rome. “When it’s around 80, this is the best we can expect,” he said, referring to the percentage rate of compliance.
Naimi, who is in Rome attending the Group of Eight industrialized nations’ meeting on energy, said official compliance data are often inaccurate, “so when you’re around 80 they can be 70 or they can be 90” in compliance.
The 11 members of the Organization of Petroleum Exporting Countries bound by targets implemented 77 percent of planned output cuts of 4.2 million barrels a day, down from a revised 82 percent for March, the Vienna-based organization said on May 13. The group cut its 2009 forecast and now estimates daily oil demand will fall by 1.57 million barrels, or 1.8 percent, to 84.03 million barrels of oil a day this year.
Oil has climbed 86 percent from a four-year low at the end of last year, reaching a six-month high of $62.26 on May 20 as OPEC implements record supply reductions to adjust to lower demand and rising stockpiles. The group will maintain a production target of 24.845 million barrels a day when it meets May 28, according to a Bloomberg survey.
Naimi said yesterday OPEC members will probably “stay the course” when they meet. At the last summit on March 15, the group decided to leave quotas unchanged and adhere to its earlier commitment to restrict supply.
High Stockpiles
Naimi said industrial oil stockpiles are too high and wants them to drop to between 52 and 54 days. Crude inventories in the industrial economies of the Organization for Economic Cooperation and Development are at their highest since 1993, at 62 days of consumption, according to the International Energy Agency.
Saudi Arabia, the world’s biggest oil producer, is currently pumping about 8 million barrels a day in compliance with OPEC quotas compared with its production capacity of 12 million barrels. The capacity will rise to 12.5 million barrels a day by the “end of June,” al-Naimi said.
Oil peaked at $147.27 a barrel in July before tumbling as low as $32.40 in December amid the global economic crisis. Crude ended New York trading at $61.67 a barrel on May 22.
“Demand reflects the price,” Naimi said today. He said last month that helping to keep oil prices at $50 a barrel was his country’s contribution to the world economy, which is fighting the worst recession in six decades.
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