Saudi men talk in front of an advertisement during the OPEC (Organization of the Petroleum Exporting Countries) summit in Riyadh in the kingdom of Saudi Arabia on Sunday Nov. 18, 2007. (AP Photo/Hasan Sarbakhshian)
VIENNA, Austria - Comments by OPEC powerhouse Saudi Arabia suggested Tuesday that the 13-nation cartel would likely keep crude production steady, despite plunging oil prices.
The Saudis account for about a third of the all output coming from the Organization for Petroleum Exporting Countries and their stance is often adopted by the other OPEC countries that control production levels.
"The market is fairly well balanced," Saudi Oil Minister Ali Naimi told reports on arrival in Vienna early the dawn hours Tuesday. "I think things are in balance, in a healthy position."
Oil prices fell more than $2 per barrel Tuesday amid growing indications that the OPEC meeting would opt to keep output steady and as Hurricane Ike appeared to head south of critical oil and gas installations in the Gulf of Mexico.
Naimi's comments come just one day after calls for a cutback from Iran, OPEC's No. 2 producer and a traditional OPEC price hawk. "We believe the market is oversupplied," Iran's oil minister, Gholam Hossein Nozari, told reporters Monday.
Other OPEC ministers have been less strident in calling for a tightening of the oil spigots, despite a nearly 30 percent tumble in oil prices from $147 a barrel in July. OPEC nations account for two-thirds of the world's known oil reserves, and about 40 percent of the world's oil production, affording them considerable control over the global market.
Venezuela is also normally among those backing higher prices. But on Tuesday Venezuelan oil minister Rafael D. Ramirez said there was no immediate need to lower production — even while warning of a likely oversupply by year's end.
"We think we can keep ... current output levels," he told reporters. Still, he suggested that OPEC would have consider cutting back in the coming months, saying the organization estimated that demand would fall by close to a million barrels by December.
That, and present overproduction of 1 million to 1.5 million barrels a day means "we need an action plan from here to December to keep the market balanced," he said.
Others sought production cuts targeting members who have exceeded their quotas. Shokri Ghanem, the chairman of Libya's National Oil Corp., told The Associated Press: "There is a glut in the market that warrants creating order."
Mohammed Abdullah Al-Aleem — Kuwait's oil minister and a member of an OPEC committee whose recommendations could influence OPEC's final decision about output — said there is no need for OPEC to cut production "for the time being."
OPEC President Chakib Khelil, however, warned of looming oversupply.
Saying "there is plenty of oil on the market," Khelil forecast output would exceed demand by between 500,000 and 1.5 million barrels a day by the end of the year or early next year.
Asked what OPEC's likely decision regarding output would be, Khelil said "all options are open."
With most of the oil ministers observing the Islamic month of Ramadan, the meeting on output levels has been postponed until late in the evening, and a decision was not expected before early Wednesday.
Just as top OPEC officials have done in the past, Khelil blamed speculators for large fluctuations in oil prices, rather than a scarcity of crude. He also cited the weak dollar.
The dollar is closing in on yearlong highs against the euro and nearly two-year highs against a basket of other currencies, just as oil prices slide.
"What we are seeing now is that the inverse relation between the U.S. dollar and the oil price is verified," Khelil said.
Since crude surged to a record $147.27 a barrel on July 11, it has tumbled by more than $40, or 29 percent.
Benchmark crude for October delivery fell $2.43 to $103.91 in electronic trading on the New York Mercantile Exchange. The contract inched up 11 cents to settle at $106.34 following a volatile session Monday, as Hurricane Ike threatened oil and gas facilities in and around the Gulf of Mexico.
Still, a major cutback from the 30.5 million barrels being pumped last month by OPEC members is unlikely without Saudi compliance.
OPEC has reason to be cautious.
Despite their precipitous fall, prices remain 14 percent higher this year than in 2007, and a barrel of benchmark crude still fetches four times what it did five years ago.
OPEC also knows that high prices drive down demand and the group will likely try to find a balance between high profits and a price that the market can accept.
That middle way would mean agreeing to pare away at overproduction without reducing the overall output quota of 27.3 million barrels a day set in November for the 12 OPEC members under production limits.