OPEC supply should reflect call on OPEC oil

OPEC crude supply should reflect the level of expected demand for the group's oil, which is currently more than 30 million b/d, a senior Gulf source said Tuesday.

"I think OPEC supply should reflect the call on OPEC oil," the source said when asked about expectations for action by OPEC ministers when they meet in Vienna on December 14. Asked to give a figure, he said: "What we are producing now, 30 million b/d-plus."

A Platts survey of OPEC and oil industry officials and analysts last week estimated OPEC output at 30.05 million b/d in October.

The December OPEC meeting is the first formal conference since the acrimonious June 8 meeting when Iran, Algeria, Angola, Venezuela, Libya and Ecuador blocked a Saudi proposal, which had been backed by the group's other Gulf Arab producers, to raise actual estimated output from all 12 members by 1.5 million b/d.

The Saudi proposal would have increased OPEC's formal output level to 30.3 million b/d in line with projections from the group's Vienna secretariat of higher demand in the second half of the year.

Kuwaiti oil minister Mohammed al-Busairi said at the weekend that he still believed OPEC needed to increase production.

"It would be logical and sensible to raise production while taking into consideration the need to avoid a supply glut," Busairi said, quoted by official news agency KUNA.

He said he stood by the position he had adopted at the June meeting--that the market needed more oil and that there was a need to increase production or face an oil price spike.

But Iran, which currently holds the OPEC presidency, wants the group to uphold the 24.845 million b/d 11-member target agreed in late 2008 when oil prices were plunging amid a deepening global recession. This target covers 11 members but not Iraq.

Late last week, oil minister Rostam Ghasemi called on those OPEC members which had boosted crude output to compensate for the loss of Libyan supply to rein in production now that Libyan output was recovering.

Ghasemi, currently in Qatar for a summit of the Gas Exporting Countries Forum, has held meetings on the sidelines of the event with his counterparts from Algeria, Nigeria and Qatar. Iranian oil ministry news service Shana said Monday that the discussions had covered the latest developments on world oil markets and issues related to the upcoming OPEC meeting but gave no additional details.

The senior Gulf source did not say what he expected from OPEC's December 14 meeting but suggested that three of the countries which had opposed an increase in June -- Iran, Algeria and Venezuela -- had political and practical reasons for having done so.

"These three, they have political and petroleum problems," he said.

Crude supply to market from OPEC kingpin Saudi Arabia in October had averaged 9.48 million b/d, the Gulf source said. When asked whether Riyadh, which boosted crude production to close to 10 million b/d during the summer when there was no supply from Libya, planned to increase output again, the source said: "It depends on the market."

World oil demand is expected to grow by 1.2-1.3 million b/d in 2012, the source said, adding: "The market can take care of that."

--Kate Dourian, kate_dourian@platts.com

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