RIYADH, Jan 24, 2011 – The Saudi oil minister said on Monday that OPEC could raise output to meet 2011 demand, forecast to rise by two percent as the world economy recovers, and prices are expected to maintain last year\’s levels.
As non-OPEC producers are likely to increase output, OPEC countries will also have the opportunity "to boost their supplies to the global market to meet the rising global demand," said Ali al-Naimi.
"I expect prices to remain at the same level as last year," said Naimi, who forecast a two-percent increase in demand in 2011 and said the world had "clearly" come out of financial and economic crisis.
Speaking at the Annual Global Competitiveness Forum in Riyadh, the oil chief of OPEC\’s largest producer said he was "optimistic about the situation of the oil market this year" and expected "a balance between supply and demand."
"Based on the global economic growth, global oil demand is expected to rise during this year by 1.5 to 1.8 million barrels per day" (mbd), said Naimi.
"The increase in global demand will come mainly from three major regions — Asia, particularly China and India, the Middle East and Latin America," Naimi added.
But he declined to say if OPEC, which pumps 40 percent of the world\’s crude supplies, plans an immediate production rise with crude prices nearing 100 dollars in January, prompting warnings from the International Energy Agency.
IEA, the energy policy and monitoring arm of the Organisation for Economic Cooperation and Development, warned in a report earlier this month that oil prices near 100 dollars a barrel pose a real risk to the world economy.
Such a price represents an "oil burden" of five percent of GDP on the global economy, the IEA calculated, and such levels have in the past "clearly been associated with economic problems."
"The policy of OPEC is to meet any increased demand to achieve a balance between supply and demand," said the oil minister of OPEC\’s kingpin, whose announcement caused world oil prices to ease slightly on Monday.
New York\’s main contract, light sweet crude for delivery in March, slipped 70 cents to 88.41 dollars a barrel, although Brent North Sea crude for March delivery edged up 12 cents to 97.72 dollars.
In its report, IEA said that growth in oil demand in 2010 reached one of the strongest rates in three decades, albeit from a low crisis level. Oil demand grew by 3.2 percent, an increase of 2.7 mbd year-on-year, to 87.7 mbd, it said.
Naimi also projected growth rates to vary between 2.5 percent a year in industrialised countries and up to eight percent in emerging economies such as China, India and Brazil.
Oil demand in emerging economies and developing countries will near the demand level of industrialised states, which he said accounted for more than 70 percent of total global demand 20 years ago, and to "even surpass it by 2013."
"The world has clearly passed the global economic and financial crisis and deep recession it experienced in 2008-2009 and entered as of last year a stage of growth which is expected to continue this year," he said.