Arab oil exporters meet to consider price rise for oil

ARAB OPEC ministers began arriving in Cairo, Egypt, yesterday ahead of talks expected to broach how high an oil price the world economy can stand as the market hovers near two-year peaks above $90 a barrel.

A full conference of the Organisation of the Petroleum Exporting Countries earlier this month elected to make no change to an output policy it has stuck to since December 2008.

Since then oil has maintained a more than 30 per cent rally from this year’s low struck in May and this week scaled a high of $90.80, the steepest in two years.

The Organisation of Arab Exporting Countries brings together the Arab members of Opec, including top exporter Saudi Arabia, which has traditionally been viewed as a price moderate.

Ministers began arriving for Saturday’s meeting where they will not take any formal decision on output, but can still discuss production and price.

“About $100 (€76) would be a fair price for the time being,” said Libya’s most senior oil official Shokri Ghanem.

Analysts have said the likelihood is the strong price would encourage Opec to produce more oil, although initially by informally pumping in excess of agreed limits rather than through a policy change.

“I think we are going to see more production because oil is above $90,” said Patrick Armstrong of London-based Armstrong Investment Managers.

“The market could easily go for $100 because we’re starting to see more commodities allocation to preserve the real value of investment portfolios, but I don’t think we’re going to see scenarios for spikes.”

Saudi Arabian oil minister Ali al-Naimi said at the start of November that consumers were looking for prices in a $70-to-$90 range.

He later reiterated a view the kingdom has held for two years that $70 to $80 was the best range for producers and consumers.

This would ensure sufficient revenue to generate investment in new oil supplies while avoiding the economic damage that could destroy the demand for oil. – (Reuters)