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No reason to expect it won’t happen if they want it to happen.
by Adam L. Freeman
May 23 (Bloomberg) — Saudi Arabian oil minister Ali al- Naimi said the price of oil will climb to $75 a barrel when demand picks up.
â€œWeâ€™ll get there eventually,â€ al-Naimi told reporters in Rome today where he will attend meetings with energy ministers from the Group of Eight industrialized nations. â€œThe trick is keeping it between $70 and $80. It will be achieved as demand rises and the fundamentals are better than they are now.â€
To reach that goal, Naimi said he will recommend OPEC members â€œstay the courseâ€ at their meeting in Vienna on May 28. Saudi Arabia is the biggest and most influential member of the Organization of Petroleum Exporting Countries, which produces about 40 percent of the worldâ€™s oil.
The group is likely to keep daily output quotas unchanged at 24.845 million barrels at the Vienna gathering, according to a Bloomberg survey.
Crude oil for July delivery rose 62 cents to settle at $61.67 a barrel at 2:45 p.m. on the New York Mercantile Exchange yesterday. The July contract increased 8.2 percent this past week. Oil is up 38 percent this year.
Naimi said oil should keep at about $75 a barrel â€œbecause that is what is desired for the world economy.â€
Saudi Arabia produced less than its quota of 8 million barrels a day last month, according to a May 13 OPEC report. The Saudis produced 7.9 million barrels of OPECâ€™s 25.3 million- barrel daily output.
Naimi said last month that helping to keep oil prices at $50 a barrel was his countryâ€™s contribution to the world economy, which is fighting the worst recession in six decades. Since he made those comments in Tokyo on April 25, crude prices have climbed more than 20 percent to above $60 a barrel.
The 12 members of OPEC, which overshot their ceiling by 410,000 barrels last month, will update their policy on oil output at this monthâ€™s meeting. At the last summit on March 15, the group decided to leave quotas unchanged and adhere to its earlier commitment to restrict supply by a total of 4.2 million barrels a day from levels in September 2008.
Naimi said his country â€œvery recentlyâ€ started production at the Nuayyim oil field and it pumping 100,000 barrels a day. He added that even though Saudi Arabia has opened new production global markets donâ€™t need the product.
â€œThe problem is the market, that the demand is only in one place — Asia and thatâ€™s all.â€
The groupâ€™s production rate rose during April, and most members are still producing more than their quota, a report from the OPEC Secretariat in Vienna showed earlier this month.
OPEC cut its 2009 forecast on May 13 and now estimates daily oil demand will fall by 1.57 million barrels, or 1.8 percent, to 84.03 million barrels of oil a day this year.