OPEC may supply less crude in 2015, Secretary General says

ALEXANDER WEBER and GRANT SMITH

VIENNA, Austria (Bloomberg) -- OPEC may cut production next year, its Secretary-General Abdalla El-Badri said.

The Organization of Petroleum Exporting Countries’ output target could fall 500,000 bpd to 29.5 MMbpd next year, El-Badri said at OPEC’s secretariat in Vienna after talks with Russian Energy Minister Alexander Novak Sept. 16. The group’s monthly report on Sept. 10 showed demand for its oil will drop to 29.2 MMbpd in 2015 from 29.5 MMbpd this year.

Saudi Arabia cut its crude supply by 408,000 bpd in August, the biggest reduction since the end of 2012, a submission made by the country to OPEC shows. Brent crude is trading below $98/bbl, close to the lowest in more than two years. U.S. crude supplies are surging while Libya’s are rebounding and a conflict in Iraq has mostly spared that country’s exports.

“Our production will be maybe 29.5 MMbpd in 2015, not 30 million barrels,” El-Badri said. “This is an outlook, not a decision.”

Brent crude futures have lost about 14% since mid-June and traded at $97.83/bbl on the ICE Futures Europe exchange as of 1:54 p.m. London time.

“I am not really concerned about the prices declining at this short term,” El-Badri said. “This is a fluctuation of seasonal behavior. When we’re coming to the fall, things will look better. I think the price will rebound by the end of the year.”

OPEC officials, including Saudi Arabian Oil Minister Ali Al-Naimi, have said they see no urgent need to respond to oil’s drop. Prices “always fluctuate and this is normal,” Naimi told reporters in Kuwait on Sept. 11. Oil will recover as demand for winter fuels climbs, Kuwaiti Oil Minister Ali Al-Omair said the same day. The group is next due to meet on Nov. 27.

Russia will meet the organization again next spring, Novak told reporters.