Saudis need 30-plus oil, so OPEC cuts will materialize

Saudis need 30-plus oil, so OPEC cuts will materialize: CGES

London (Platts)--20Dec2004


Saudi Arabia's need for oil prices of well above $30/bbl will ensure that
crude output cuts agreed at OPEC's Dec 10 meeting in Cairo will materialize,
the Center for Global Energy Studies said Monday. 

But while the CGES agreed that OPEC would need to curb production next year, it

said the decision to cut 1-mil b/d of leakage to bring output back to the current

ten-member 27-mil b/d ceiling was premature and the result of the cartel's focus

on short-term issues. "Saudi Arabia needs oil prices well above $30/bbl to retire

debt and pay for extra security-related costs, while other OPEC countries are always
strapped for cash," the CGES said in its Monthly Oil Report. OPEC was also
probably swayed by its own Secretariat's 28.1-mil b/d projection of first
quarter 2005 demand for crude produced by all 11 OPEC members, including Iraq,
said the CGES, which estimated total OPEC output at 29.85-mil b/d in November.
The $7/bbl fall in US crude prices in the two weeks prior to the Cairo talks
also appeared to have "spooked" OPEC into deciding cut output, the CGES said.

This story was originally published in Platts Global Alert
(http://www.platts.com/Oil/Real-Time%20Information/Global%20Alert/)

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