OPEC Not Planning to Hike Output at June Meet: Chief

[chlamor]

OPEC not planning to hike output at June meet: Chief

Haitham Haddadin (Reuters)

Kuwait, May 9, 2005

OPEC president Sheikh Ahmad al-Fahd al-Sabah said on Sunday the oil producers' cartel does not intend to hike its production levels at its meeting next month since markets are oversupplied.

"We can't increase production now," Sheikh Ahmad told reporters at an industry function in southern Kuwait, when asked if OPEC will decide an output hike at its June 15 meeting in Vienna.

"Now, OPEC's production has reached 29.7 million barrels per day, or up 2 million bpd since the Isfahan meeting (in mid-March) ... which has created a surplus in the market of more than 1.2 million bpd," said Sheikh Ahmad, who is Kuwait's oil minister.

<snip>

"The market is covered and supported by suitable quantities of oil that exceed global demand. Therefore, there is no worry over crude oil supply shortages in world markets," he said.

http://www.hindustantimes.com/news/181_1353514,00050004.htm

[yltlatl]

1. Saudi Arabia Tapped Out?

It is generally understood that Saudi Arabia is the only OPEC member with much spare capacity (as is suggested by the article above, which mentions Kuwait is pretty much at capacity). According to this Bloomberg article (http://www.bloomberg.com/apps/news?pid=10000086&sid=aQTomFpjagVo&refer=latin_america), SA has about 1 mbpd spare capacity and is pumping 9.45 mbpd (or 10 mbpd if you believe this more recent article: http://quote.bloomberg.com/apps/news?pid=10000006&sid=astn5jHGaHfc&refer=home). According to this article OPEC is currently pumping 29.76 mbpd and global demand is expected (by OPEC) to reach 30.4 mbpd by year's end. If Saudi Arabia pumps an additional 640,000 bpd to make up the difference, they will be within 360,00 bpd of their stated current spare capacity.

[tedoll78]

2. Ouch.

I wonder how high the price per barrel will get?

And as the price of oil goes up (along with the prices of all of its corollary products), how long will it take the US to begin its next recession?

And then, once we're in recession (with the standard accompanying temporary drop in oil consumption), how long until depression?

Bloomberg is pretty mainstream, as far as financial media go. I only wonder how soon it reaches the popular mainstream media.. front page articles in NYT, leading story on the hour on CNN, Jon Stewart cracking jokes about it, etc..

[jamesinca]

4. Saw on TV tonight, for the first time

A Honda car ad for 60+ mpg. The big three are still turning out the SUV/Hummer type vehicles and Toyota and Honda are kicking butt in the 50 and over category. The higher the oil price the worse the big 3 will do and the better Honda/Toyota will do. I also remember an article where some financial wiz kid out of London was predicting by years end that oil would be +/- $100 per barrel. I smell a layoff at the Hummer factory if that happens.

[LiberallyInclined]

3. the price of oil might be affected by news like that.

it sure is fun living in interesting times.