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Oil at $70-$80 ‘Acceptable, Reasonable’

ABU DHABI/VIENNA — UAE Minister of Energy Mohammad bin Dhaen Al Hamili has said that the current level of oil prices — which are in the range of $70-80 a barrel — are “acceptable and reasonable’’ for both producers and consumers.

“The current levels of oil prices will enable Opec member states to secure investments for boosting crude oil output capacities in the years to come to catch up with pace of economic growth,” Al Hamili told the official news agency Wam, ahead of the Opec meeting in Vienna on Wednesday.

Opec ministers will decide whether to revise output target that has remained unchanged since the end of 2008, when they decided to impose cuts on output to stop a steep fall in prices that touched a record high of $147 a barrel.

Abu Dhabi planned to lift its oil output capacity by about 30 per cent in phases to 3.5 million barrels per day by 2019.

The UAE’s sustainable crude output capacity is 2.70 million barrels per day.

Al Hamili said it is not natural to predict the resolution the Opec meeting will make on the production ceiling in the coming period. However, current data in the oil market do not invite a change in the targeted output level.

He indicated that Opec has revised its projection for growth in the world oil demand for 2010 from 810,000 to 880,000 bpd, based on indicators showing recovery of global economy.

Al Hamili assured the market that Opec would continue to provide enough crude oil supplies in case the demand goes up, as it has the additional output capacity to meet that demand.

He believes that the world oil market might see a decline in world demand in the second half of the year for seasonal factors at a time when global oil inventories were rising over standard levels seen in the past five years, putting a pressure on prices.

Al Hamili also noted that the relative improvement in oil prices “has nothing to do with supply and demand fundamentals,” and is primarily attributed to the dollar exchange rate against other currencies and other economic growth indicators.

The UAE’s oil output in February fell marginally from January to 2.28 million bpd, according to the International Energy Agency, which advises 28 member countries on energy policy.

Opec Meeting will be “Easy”

Meanwhile, Al Hamili, upon his arrival in Vienna, has asserted the UAE’s adherence to production quota set by Opec.

The minister expected that the156th Opec ministerial meeting due to open today in the Austrian capital will be “easy”.

In remarks to reporters upon arrival in Vienna at the head of the UAE delegation participating in the meeting, Al Hamili said that the oil market now has an adequate supply of crude oil.

Global oil stocks are at a higher level in comparison to those during the last five years, Al Hamili explained.

He noted that the current oil prices do not reflect the fundamentals in the present oil market, but mirror the outlook of rising global demand for oil with the recovery from the global financial crisis.

· haseeb@khaleejtimes.com

· With inputs from Wam