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Venezuela Worries That OPEC Is Flooding Oil Market

Venezuela Worries That OPEC Is Flooding Oil Market

Minister says unnamed Gulf states are over-producing; OPEC should aim for minimum price of $100 per barrel

April 18, 2012 9:12 by

Venezuelan Energy Minister Rafael Ramirez said on Tuesday that the South American OPEC nation was concerned about global oil market stability and that OPEC should aim for a minimum price of $100 per barrel.

Ramirez said Venezuela was worried about surplus supply depressing oil prices and disagreed with the decision of some members of the Organization of the Petroleum Oil Exporting Countries to increase production.

“There are countries in the Gulf that are not following OPEC price policy and are acting more in favor of consumer nations,” Ramirez told reporters. “I don’t want to name them … they are over-producing.”

On Friday, the world’s top exporter, Saudi Arabia, said it was determined to bring down high oil prices and is working with fellow OPEC members to accomplish that.

In March, Brent crude prices surged to a 2012 peak above $128 a barrel, a 19 percent rise from the end of 2011. A conflict between western nations and Iran over the Islamic state’s nuclear program had fed worries about supplies.

But recovering Libyan oil exports and higher output from Saudi Arabia and Iraq have helped check the price surge, along with the West mulling a strategic reserves release.

“Unfortunately we have to say that there are countries in the Gulf that are adjusting their oil policies to a strategy that was linked to the destabilization of Libya,” Ramirez said.

“We do not understand how an OPEC nation can establish a strategy in favor of consumer nations when it (OPEC) should have been united in defense of the producers.”

Venezuela’s economy is almost entirely reliant on its huge oil industry, and President Hugo Chavez’ socialist government routinely calls for a minimum oil price of $100 per barrel.

In recent months it has got its wish: crude has traded above $100 for all but a couple of days during the past year.

Brent June crude was trading up 10 cents at $118.78 a barrel on Tuesday, while U.S. May crude futures rose $1.32 to $104.25.

Saudi Arabia is pumping 10 million barrels per day, its Oil Minister Ali al-Naimi said in a statement on Friday, reiterating that the Kingdom’s production capacity was 12.5 million bpd.

Fellow OPEC producers Libya, Iraq and Angola have increased output, Naimi said. Non-OPEC members including Canada, the United States and Russia had also boosted supplies, he added.

The International Energy Agency said last week that the oil market had broken a two-year cycle of tightening supply conditions as demand growth weakens and Saudi Arabia increases output. High oil prices could be expected to ease when markets woke up to the shift in trend, it said.

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