SINGAPORE: Top oil exporter Saudi Arabia on Monday shifted upwards from a price it has backed for around two years, saying oil at between $70 and $90 a barrel was comfortable for consumers.
Until now, Saudi Oil Minister Ali Al-Naimi had said the ideal range for producers and consumers was $70-$80 a barrel, either side of the $75 identified by the kingdom in November 2008.
"Consumers are looking for oil prices around $70, but hopefully less than $90," Saudi Oil Minister Ali Al-Naimi said in comments following a speech in Singapore. "There’s almost an anchor now for the price."
In response to Naimi’s comments, oil prices rallied and hit a session high of $83.86 a barrel.
For much of this year, international benchmark U.S. crude had largely stuck to the $70-$80 range but has broken above the top of that bracket in the past month, led higher by a weak U.S. dollar, which makes dollar-denominated commodities relatively cheap.
Naimi described the oil price environment as still "very decent".
"We’re in a very comfortable zone. I believe this zone should continue for some time. I would not predict for how long," he said.
"If I can be audacious, I would say producers, consumers and companies are all happy with this price."
Further price direction could largely depend on the outcome of a meeting on Tuesday and Wednesday of the U.S. Federal Reserve, which is expected to opt for further quantitative easing.
In the past, Saudi Arabia has voiced concern at market moves unrelated to oil fundamentals of supply and demand.
At the height of the oil market rally in 2008, when prices peaked at a record of nearly $150 in July, Naimi told a meeting in Saudi Arabia the kingdom would pump more oil if there were demand for it.
On Monday, he said incremental demand would be met.
"Demand is driven by need, and if there is need for additional supplies, it will be provided," he said.
Gulf ministers generally comfortable
Other OPEC ministers from the core Gulf producing region have also said they are broadly happy with market conditions.
Qatari Oil Minister Abdullah Al-Attiyah said on Monday before Naimi’s remarks that $70-$80 a barrel was "very comfortable for consumers and producers for the time being".
Attiyah also said it was difficult to predict the producer group’s supply policy for 2011 because of uncertainty about the global economy.
OPEC next meets in Quito in December after agreeing to hold output steady at a conference in October.
The Organization of the Petroleum Exporting Countries has made no formal change to output policy since December 2008, when it announced record output curbs of 4.2 million barrels per day in response to global recession and a slump in demand for oil.
The depth of that supply cut left plenty of room for informal adjustments, and OPEC’s output discipline has slipped as the oil price has rallied.
It stood at 54 percent in October, according to the latest Reuters survey.
Additional reporting by Alejandro Barbajosa and Florence Tan.
