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Kuwait sees $90 as new oil price floor
Kuwait not boosting output in April; Brent trading close to $120 a barrel; Oil prices would fall if regional conflict short-lived
April 4, 2011 4:56 by Reuters
Kuwait would like to see world oil prices decline but does not expect them to fall below $90 a barrel, Farouk al-Zanki, chief executive of state oil company Kuwait Petroleum Corp (KPC), said on Monday.
Oil traded above $119 a barrel for Brent on Monday, just off a two-and-a-half year high touched in February, spurred by political instability in the Middle East and North Africa.
Unrest in the region may prove short-lived, which should allow oil prices to decline, Zanki said, but he said crude was unlikely to be as cheap as it was before the crisis.
“When oil prices rise for any reason … they then drop to a higher level than before. So now when (oil) drops I expect it to drop to between $90 and $100 a barrel,” Zanki told reporters on the sidelines of an industry conference.
Fighting between rebels and forces loyal to Libyan leader Muammar Gaddafi has shut down almost all of Libya’s 1.6 million barrels per day (bpd) oil industry, prompting OPEC heavyweight Saudi Arabia to boost crude production to try and compensate for the loss and rein in oil prices.
Saudi Oil Minister Ali Naimi said in November that $70 to $80 was his target range for oil prices but the Kingdom has since splashed out $93 billion in handouts to keep a lid on dissent, leading some analysts to conclude Saudi will need a higher oil price to balance the books.
Saudi Arabia holds the bulk of the world’s surplus oil capacity, but its fellow Gulf producers Kuwait and the United Arab Emirates also have some ability to add extra crude to the oil market at short notice.
A Reuters OPEC survey found they too had increased output in March. [OPEC/O]
Asked whether Kuwait had increased production, Zani said the government had not instructed Kuwait Petroleum Corp to pump more this month.
“So far we have not been told to do that (for April),” he told reporters after his speech.
Kuwait says it has between 600,000 and 700,000 bpd in spare production capacity, although consuming nations put the figure at about half that level.
The Gulf state produced 2.42 million bpd in March, up from 2.31 million bpd in February and over its implied 2.22 million bpd OPEC quota, according to the Reuters survey.
Saudi oil output has risen to around 9 million bpd and the kingdom last month increased the number of drilling rigs it has operating to maintain its 12.5 million bpd oil production capacity.
Some of the rigs will likely be deployed in the Neutral Zone between Kuwait and Saudi Arabia that is shared by the two countries, Bader al-Khashti, chairman of Kuwait Gulf Oil Company, the KPC subsidiary that oversees Kuwait’s interests in the Neutral Zone told Reuters.
Khashti said Kuwait’s share of oil production in the Neutral Zone was about 285,000 bpd. Total output capacity from the area is 610,000 bpd.
(Reporting by Eman Goma; writing by Robert Campbell; editing by Keiron Henderson)