OPEC ministers gathering in Vienna have two tasks ahead of them on Wednesday: fix crude output policy for the year ahead and appoint a new secretary general to succeed the outgoing Abdalla el-Badri.
While the 12-member group appears headed for a fairly straightforward rollover of the current 30 million b/d production ceiling, an agreement on a new secretary general looks far less likely.
OPEC's current president, Iraqi oil minister Abdul-Karim al-Luaibi, told reporters in Vienna on Sunday that supply and demand had been in balance over the past four months and oil prices stable, though he would not predict the outcome of this week's talks.
"In the last four months, we have seen balance between supply and demand. Supply and price are stable," he said. "All members of the organization continue to strive for stability and balance of market and price."
"There are changes from quarter to quarter, you have refinery maintenance periods for example," he added. "The market is stable, but there is a bit of oversupply this quarter."
Brent crude futures have fluctuated within a $6 range in recent weeks, between $106-$112/barrel.
NO REASON TO CHANGE TARGET
Earlier Monday, a top Kuwaiti oil official said he also saw a balanced market and that he did not think OPEC needed to change its current production target at Wednesday's meeting.
"...I don't think there's any reason to change production levels," Farouq al-Zanki, chief executive of state-owned Kuwait Petroleum Corporation, told reporters in Kuwait City.
"But it's up to them, maybe they see something I do not," Zanki said, adding that he was expressing his own opinion of the market.
"I think the market is stable with regard to supply and demand. That's my opinion, and that production will stay where it is today," he said.
Zanki told reporters earlier that acting oil minister Hani Hussein would not attend the Vienna meeting, but gave no reason. Kuwait currently has a caretaker government following the resignation of the cabinet last week in the wake of parliamentary elections.
OPEC kingpin Saudi Arabia has yet to reveal its position, but oil minister Ali Naimi, who is expected to arrive in Vienna later Monday, said last month that oil prices were "good," markets in balance and inventories comfortable.
"I think it's [the market] very balanced. Inventories are comfortable. The market clearly is in good shape. We are very happy with the situation," Naimi said at the time.
"If the recovery is better than what we see today, demand for energy will go up and petroleum is a part of that," he said.
"If the recovery is on the negative side, and a recession happens, which I hope doesn't happen, then it will be a little bit of trouble," he said, adding in a reference to the December 12 meeting: "This is one of the scenarios we have to look at."
Analysts at JP Morgan said in a note Friday that it saw little room for OPEC to raise official output levels and also few incentives to cut production.
"Actual crude production is already running about 1.4 million b/d above plan, according to our estimates, leaving minimal spare capacity outside the core Gulf Trio of Saudi Arabia, Kuwait and the United Arab Emirates. So there is little room to raise official output levels," they said. "There are also few incentives to cut production. Strong refinery utilization rates indicate a healthy appetite for crude, even with Brent averaging above $100/b. Hence, we do not anticipate any major changes to existing policies and production targets."
"While there may be some discussion on adherence to the group's 30 million b/d collective production ceiling, there is likely to be agreement that the market is reasonably 'well supplied' by the producer group," the analysts added.
A Platts survey of OPEC and oil industry officials and analysts on Friday estimated that output from the oil cartel dipped by 90,000 b/d to 31.08 million b/d in November, from 31.17 million b/d in October.
When OPEC agreed the current 30 million b/d ceiling in December last year, it did not distribute individual country quotas. This approach has deflected the focus away from individual quota-busters towards countries such as Saudi Arabia which have greater flexibility to adjust output.
OPEC president Luaibi was asked whether individual quotas would be discussed this week.
"This is the wrong time to discuss this. According to the policy of OPEC, we have to watch the market in order to keep it balanced," he said.
Luaibi was also asked when he thought the issue of a quota for Iraq, whose output is included under the general 30 million b/d ceiling but which has been outside the quota system since 1990, would come up for debate.
"This is not one of the issues which is on the schedule of this meeting. We are so far away from this," he said.
DEADLOCKED ON SECRETARY GENERAL
Luaibi also said the group remained deadlocked on the appointment of a secretary general to succeed Abdalla el-Badri and he warned that failure to name a replacement could roil global markets.
"This is a very difficult situation," Luaibi told reporters Sunday. "So far we don't have a solution to this. It is dangerous for the future of the organization. This condition might affect the oil markets. I want all the members to understand this danger."
Representatives from OPEC's top three producers -- Saudi Arabia, Iraq and Iran -- are vying for the organization's top administrative post. Badri, a former Libyan oil minister and oil industry veteran, is finishing up his second three-year term as secretary general.
According to Luaibi, OPEC rules do not allow an extension of Badri's term. There has been speculation, however, that if ministers fail to agree on his successor, Badri could be asked to stay on while efforts continue to resolve the issue, or that Kuwait, which will take on the OPEC presidency next year, could appoint an official to run the Vienna secretariat. Hasan Qabazard, a Kuwaiti, is OPEC's current head of research in Vienna.
Political rivalries have often complicated OPEC's selection of a new secretary general. This time around, the race pits OPEC kingpin Saudi Arabia against rising Iraq, which recently became the cartel's No. 2 producer, and sanctions-hampered Iran, which dropped to the No. 3 producer.
Iraq has nominated Thamir Ghadhban, the energy adviser to its prime minister; Saudi Arabia has nominated its OPEC governor Majid Al-Moneef, and Iran has nominated former oil minister Gholamhossein Nozari.
Ecuador nominated its oil minister Wilson Pastor-Morris, but he announced his withdrawal from consideration earlier this month.
