OPEC would pump more oil to prevent a rally in oil prices above $100 from hurting the global economic recovery, Kuwait’s oil minister said on Sunday.
Oil is well below the $100 a barrel mark, settling at just over $85 a barrel on Friday. For a month, oil has traded over the $70 to $80 level that many in OPEC have pegged as fair.
But there was room for more upside before the producer group would respond, Sheikh Ahmad al Abdullah al Sabah told Reuters in an interview at a media event.
He said: “If it’s sustained above $100 that would damage the economic recovery.” When asked if OPEC would boost supply to prevent that, he replied “I would say so.”
The producer group was ready to boost output if demand warranted, Sheikh Ahmad said.
OPEC has kept oil supply targets unchanged since late 2008, although higher oil prices have encouraged some members to boost output informally.
Lack of compliance among OPEC members with their output targets was leading to oversupply, Sheikh Ahmad said.
He said: “The fundamentals still aren’t right, the way we expected.”
Still, the world’s fourth largest oil exporter had seen a sudden jump in demand from Asia that was absorbing some of the surplus, he said.
He said: “I was surprised a little bit, to see a sudden surge.”
He added: “I was expecting to see the demand, but not at the same pace as we’ve seen lately… Look at China and India, they are taking part of the surplus.”
Kuwait ships most of its exports to Asia. It pumped around 2.3 million barrels per day (bpd) in March, according to a Reuters survey.
Current oil prices were acceptable to both producers and consumers, he said.
The oil price was reacting to movements of the dollar and sentiment about pace of economic recovery, rather than to fundamentals, he said.
A delegation from Kuwait would leave for China on Monday to continue negotiations with China’s Sinopec Group on a joint refining and petrochemical project in Zhanjiang, Sheikh Ahmad said.
Kuwait hoped some kind of an agreement would be signed soon, he added, declining to give further details.
A feasibility and environmental impact assessment for the $9 billion, 300,000 bpd plant was due for completion last month.
The plant in China and another in Vietnam were priority projects for Kuwait, he said.
At home, Kuwait continued to focus on boosting oil capacity to 4 million bpd from 3 million bpd by 2020, and sustaining the higher capacity level for 10 years, he said.
The Gulf Arab country was sitting on more oil than previously thought, not just the Burgan oilfield, Sheikh Ahmad said.
He declined to give more details. Kuwait holds about 8 percent of all the world’s oil reserves, he said.
Last week, a Kuwaiti official said Greater Burgan, the world’s second largest oilfield, was bigger than past estimates had indicated. (Reuters)
