Oil prices have risen above $68 a barrel after the Saudi oil minister said the global economy can handle oil prices between $75 and $80.
The Saudi Oil Minister, Ali al-Naimi, said that the global economy was capable of managing with oil as high as $75 to $80 a barrel, according to reports from Reuters.
"The price rise is a function of optimism that better things are coming in the future," Naimi told reporters in Vienna, according to reports from Reuters. "We see offshoots of recovery." Comments from the head of oil juggernaut Saudi Arabia tend to drive the price of crude.
Al-Naimi hinted at higher prices in the future, but for now, the Organization of Petroleum Exporting Countries was expected to leave production quotas unchanged. The cartel - whose members produce about 40% of the world's crude - meet Thursday in Vienna to discuss production levels. When they cut production levels, that props up oil prices by reducing supply.
Starting late last year, OPEC announced reductions of 4.2 million barrels a day, and member nations have largely been complying with the production cut backs.
But with oil prices already on the rise and a tender global economy looking to stage a recovery, OPEC would be hard pressed to rationalize further production cuts.
The recession has cut demand for oil drastically, as cash-strapped consumers and businesses reduce their energy consumption. Therefore, inventory levels in the U.S. have been mounting, and the government's weekly supply reports have been closely monitored.
In the longer term, the EIA says that it expects demand to recover and continue to grow. In its most recent International Outlook, released Wednesday, the EIA projected that global energy consumption should shoot up by 44% from 2006 to 2030.
Source: CNN |
