OPEC may act to reduce the oil glut

OPEC’s president Abdul Kareem Luaibi, who is also Iraq’s oil minister, said maintaining the price at $100 (£64.34)-$120 a barrel was “reasonable and acceptable”, but repeatedly declined to specify what action, if any, OPEC might take when it meets on Thursday.

Supply from OPEC is running nearly 2 million barrels per day (bpd) above a self-imposed production ceiling of 30 million barrels per day set when ministers last met in December. At the time, individual targets for countries were not allocated.

“It’s very clear there is a tremendous surplus that has led to this severe decline in prices in a very short time span,” Mr Luaibi said. “This will not serve anyone.”

Oil is now trading at about $100 a barrel after falling back from a four-year high of $128 in March. Worries about the slow pace of global economic recovery have helped depress prices, which had been boosted earlier this year by tension between the West and Iran over its nuclear programme.

The OPEC president said that ministers of the 12-nation group would decide what action to take after a review of market conditions, but declined to give further details. “We have our own view about the surplus, but it’s not diplomatic to talk about if for the time being,” he said.

Kuwait’s oil minister said he believed a discussion about potential output cuts was most likely inevitable.