CAIRO, Egypt – Saudi Arabia's king says the price of oil should be $75 a barrel, much higher than it is now, but his oil minister indicated Saturday that no measures will likely be taken until OPEC meets again next month.
Saudi Oil Minister Ali Naimi said that the Organization of Petroleum Exporting Countries will "do what needs to be done" to shore up falling oil prices when the group meets Dec. 17 in Algeria, but for now it was "too early."
Other ministers at the hastily convened OPEC meeting in Cairo did not entirely rule out cuts, including Libyan oil official, Shokri Ghanem, who, ahead of the meeting, said "all options are open."
But Naimi, whose country is the world's largest oil producer, said the bloc needs to wait until the Algeria meeting to assess the impact of earlier production cuts.
Naimi's comments came after Saudi King Abdullah told the Kuwaiti newspaper Al-Seyassah in an interview published Saturday that oil should be priced at $75 a barrel.
"We believe the fair price for oil is $75 a barrel," he said, without saying how the price could be raised.
The price of crude stood at about $147 a barrel in mid-July. On Friday, the U.S. benchmark West Texas Intermediate crude for January delivery was trading at about $54 per barrel.
The king was echoed by Qatar's Oil Minister Abdullah Bin Hamad al-Attiya, who told the Arab news channel Al-Arabiya that prices needed to rise to guarantee investment into the oil sector.
"The price between 70 to 80 (dollars a barrel) is the one encouraging in investment and developing new or current oil fields," he said. "It falls below 70 (dollars), the investment would freeze, which will lead to a crisis in supply in the future."
Nigerian Oil Minister Odein Ajumogobia also said they would be "very happy" with oil at $75.
The cartel has already held an emergency meeting in Vienna on Oct. 24 to announce a production cut of 1.5 million barrels per day.
The cut failed to stop the price drop, and the cartel abruptly convened the Cairo gathering on the sidelines of the Organization of Arab Petroleum Exporting Countries' meeting.
Kuwait's oil minister, Mohammed al-Aleem, said he believes there is no need for OPEC to make a decision in Cairo on cutting output. But he warned the market is oversupplied, and didn't rule out the need for OPEC to cut production further.
"We believe a decision could be taken ... but I think it will happen in Algeria," he said.
Al-Aleem said current prices could undercut investment in future projects and were not good for either producers or consumers.
The recent price drop has left OPEC price hawks Venezuela and Iran clamoring for further reductions of at least 1 million barrels a day. Both countries need crude at about $90 per barrel to meet spending needs aimed in part at propping up domestically unpopular regimes.
Other OPEC members, such as Nigeria and Ecuador, face budget problems too, making them reluctant to implement more cuts that might shrink revenues further.
The Saudis are better positioned to cope with the drop in prices. The International Monetary Fund estimates Riyadh needs crude in the range of about $50 per barrel for 2008 fiscal accounts to break even.
The statements by the king, however, indicate that normally dovish Saudi Arabia is ready to see the price rise, indicating cuts will eventually take place.
OPEC itself, along with the International Energy Agency, has significantly revised down its projections for demand growth in 2009.
Meanwhile, global crude inventories are growing, as evidenced by a U.S. government report showing a surprisingly large 7 million barrel build in stocks last week in the world's largest energy consumer.
OPEC's last round of cuts would put its total production at about 30.5 million barrels per day, according to the IEA. That is about 500,000 barrels per day higher than the forecast call on OPEC crude in much of 2009.
A Nov. 24 New York-based Oppenheimer & Co. research report says that for oil to rebound to $65 a barrel, OPEC would need to cut crude production by more than 3 million barrels per day from its September levels — a move it called highly unlikely.
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Associated Press Writer Hadeel al-Shalchi contributed to this report.
