OPEC Arab Producers Pushing for $60 Oil
EghtesadOnline: Some of OPEC’s biggest oil producers, including Saudi Arabia, are now targeting $60 a barrel as the level where they want to push crude prices, OPEC officials said, signaling they will support additional production cuts next month.
Saudi Arabia, Iraq and Kuwait believe $60 a barrel will lift their economies and allow for more energy-industry investment, the officials said, without jumpstarting too much American shale output, which can be ramped up and down with prices more easily than most oil production, The Wall Street Journal reported.
The countries had been targeting $55 a barrel, a level they have largely achieved with an Organization of the Petroleum Exporting Countries production cut of 1.2 million barrels a day.
Saudi Arabia, Iraq and other members of the 13-nation organization have signaled they will push to extend those cuts for another six months on May 25, when they meet in Vienna, according to Financial Tribune.
“Iraq wants prices to rise to $60. This is our aim,” said Iraq’s oil minister Jabbar al-Luaibi in an interview. People familiar with Saudi and Kuwaiti oil policies confirmed those countries also now want $60 a barrel.
OPEC members’ ideal price for oil is in some ways symbolic, as there are unpredictable variables that influence crude’s price—from Chinese oil demand to supply disruptions in Libya to American oil-drilling technological advances.
In 2013, then oil minister for Saudi Arabia, Ali al-Naimi, declared $100 a barrel a “reasonable price” for consumers and producers; the next year, oil prices collapsed.
But OPEC members’ target price offers a window into how serious they are about using their supply power to affect the market. So far, OPEC members have been more compliant with their oil-production agreement than in years past, with almost all the cuts being carried out.
Other OPEC members, including Iran, could upend the plans to reach $60 a barrel. But Saudi Arabia, Kuwait and Iraq—while not always aligned on oil policy—represent oil industries that produce over half of OPEC’s total production.