Oil price fails to rattle Opec

The first signs of an Opec consensus start to emerge ahead of next month's meeting.

A top UAE official has echoed the head of Opec's view that the current oil price is not undermining the global economy, as signs of an Opec consensus start to emerge before its meeting next month.

Abdalla El Badri, the Opec secretary general, said at a conference in Tehran yesterday that the current price of oil was no threat to global economic growth, even as the fear of another downturn begins to take hold.

"The price of US$100 is comfortable for the consumer and the producing countries … The crude price is not expected to come down until the end of this year. I am hopeful that there will be an agreement over Opec's production target in the next meeting," he said, Reuters reported.

His view is supported by Iran, an Opec member.

"The current oil prices are good … We are not expecting the prices to change in winter," Rostam Qasemi, the country's oil minister, said at the conference. The price of Brent has averaged about $111 a barrel for the year so far, driven by strong economic growth in Asia and the loss of supply from Libya as the country became embroiled in civil war from February. As prices rose, Saudi Arabia, the UAE and Kuwait defied an Opec majority, including Iran, by increasing production to support the fragile global economic recovery.

At a conference in Abu Dhabi, also held yesterday, Obaid Al Yabhouni, the UAE's Opec governor, echoed Mr El Badri's sentiments.

"This year has seen prices consistently above $100 a barrel," he said. "Encouragingly, there is hardly any evidence that higher energy prices have had an impact on the world economy. Today's challenges, besides structural change reflected in the globalisation process, have more to do with the financial mismanagement and fiscal irresponsibility."

This view was supported on Monday by Mohammed Al Hamli, the UAE Minister of Energy, who suggested at a conference in Singapore that a reasonable price for oil was $80 to $100 a barrel.

Brent crude traded at $109 a barrel on Monday, while Nymex futures stood at $90.77, having recently dropped over fears that the euro-zone crisis could push some countries back into recession. Against this backdrop, oil-importing countries, represented by the International Energy Agency (IEA), have recently warned against cuts in output.

Also on Monday, Nobuo Tanaka, a former head of the IEA, warned that Brent prices above $100 a barrel risked an economic crisis equivalent to the 2008 economic downturn.

The UAE is pumping at 2.5 million barrels per day (bpd) from capacity of 2.7 million bpd in response to the supply shortfall from Libya. The country is one of three Gulf Opec members with spare capacity.