Oil experter cartel is satisfied with $70-80 a barrel. (Photo: Reuters)
OPEC will not raise oil supplies at a meeting on Saturday, Saudi Oil Minister Ali al-Naimi said, leaving traders to ask what price the group requires to open the taps and prevent fuel inflation hurting global economic recovery.
"Absolutely not," Naimi told reporters when asked if the Organization of the Petroleum Exporting Countries needed to raise production.
Oil prices are just short of the top end of the $70-$90 a barrel range flagged recently by Naimi as the level consumer nations can cope with, but concern about the potential damage of rising fuel costs on a convalescent world economy is mounting.
Naimi, OPEC's most influential voice, would not say whether or not Saudi was comfortable with prices that set a two-year high of over $90 for U.S. crude this week.
But some analysts think Riyadh is unlikely to let prices rise much above $90 without stepping in, for fear that economic growth will suffer and hurt fuel demand growth.
The cartel cut output sharply two years ago after a recessionary slump in crude prices and has not changed policy since.
"I don't believe the Saudis will embrace $90 oil with the economic minefield ahead of us," said Gary Ross, CEO of leading energy consultancy PIRA Energy Group.
"There would be a lot of pressure on the Saudis and OPEC in general to raise production as $100 oil would be viewed as injurious to economy," said Phil Flynn, analyst at PFG Best Research in Chicago.
Naimi said that under current circumstances he saw need for OPEC to meet again before its next scheduled gathering in June.
OPEC Secretary-General Abdullah al-Badri said on Thursday ministers wanted to see real evidence of extra demand and would not raise output, even at $100, if they felt price rises were led by speculation.
OPEC's reading of the strength of supply-demand fundamentals is conservative compared to that of consumer advisory body the International Energy Agency.
The two groups on Friday released widely divergent views of global demand growth and the requirement for extra OPEC supply.
OPEC's report estimated demand will grow this year at 1.47 million barrels per day (bpd) on the 86 million-bpd world market.
The IEA said it expects global demand growth to average 2.47 million bpd for 2010 and said consumption in the third quarter surged by 3.3 million bpd.
"Against a backdrop of much stronger-than-expected global oil demand growth and oil prices above two-year highs, OPEC may come under pressure to increase supplies to the market in the new year," the IEA.