The Organization of Petroleum Exporting Countries will probably keep production close to a 25- year high, seeking to send oil prices to less than $50 a barrel and meet rising demand, officials from the group and analysts said yesterday.
OPEC should maintain its output quota of 27 million barrels a day when it meets Wednesday in Isfahan, Iran, said the group's president, Sheikh Ahmad Fahd al-Sabah. It is the first meeting in Iran since 1971 for OPEC, which pumps 40 percent of all oil.
Oil prices reached $55.65 a barrel in New York last week, extending a three-year rally as rising demand from China, India and the United States strains the ability of OPEC and other producers to keep pace. The Paris-based International Energy Agency last week said it expects demand this year to increase 2.2 percent.
"There will be no official change on output quotas," said Leo Drollas, deputy executive director of the Centre for Global Energy Studies in London, a consulting company founded by former Saudi oil minister Sheikh Zaki Yamani. "Maybe unofficially they will give customers a bit more oil because prices are high."
OPEC at the meeting will also consider proposals to increase its price target, as world economies show little sign of slowing from rising energy costs. OPEC's 11 members in January abandoned a four-year-old price target centered on $25 a barrel.
High oil prices last year led to record oil industry profits. Exxon Mobil Corp., BP Plc, Royal Dutch/Shell Group, ChevronTexaco Corp. and Total SA, the five largest publicly traded oil companies, in 2004 reported a combined net income of about $85 billion, equal to the economic output of Venezuela, a nation of 25 million people and OPEC's third-largest member.
OPEC's oil export revenue is likely to rise to $359 billion this year from $303 billion in 2004, assuming crude prices averages about $45 a barrel, Drollas said.
Should OPEC replace its former price range of $22 to $28 a barrel, members may set a minimum level and offer no limit to how high prices may rise, said Paul Horsnell, head of energy research at Barclays Capital in London. Libya in January argued for a $35 a barrel minimum. Kuwait wants prices of $28 to $35 a barrel, the nation's minister said March 1. OPEC targets prices for the group's oil index, which was last at $49.40 a barrel.
"What would be a reasonable minimum for OPEC? You would think in terms of $35 a barrel," Horsnell said. That would equal New York prices in the "the low $40s" a barrel, because a better quality of oil trades there.
