SWEIMEH, Jordan (Reuters) - Kuwait’s oil minister said there was no need for further output cuts by OPEC as he did not want to see oil prices go up too fast and a scrapped $17 billion deal with Dow Chemical DOW.N would not be revived.
“Of course no reduction. Definitely. It goes without saying,” Sheikh Ahmad al-Abdullah al-Sabah said on the sidelines of the World Economic Forum in Jordan when asked what measures he wanted to see at the next OPEC meeting.
The Organization of the Petroleum Exporting Countries next meets in Vienna on May 28 to assess its output policy. It has agreed to reduce output by 4.2 million barrels per day (bpd) compared with production last September and many analysts say it has delivered more than 80 percent of that cut.
Oil prices have recovered from a low of $32.40 touched last December to around $58 a barrel on Friday, though the International Energy Agency says world demand will post its sharpest annual decline since 1981 this year as the world economy struggles to recover.
The decline in oil prices and OPEC output cuts have raised fears that producing countries will not invest in raising output capacity, resulting in a potential supply shortfall once the global economy recovers and energy demand picks up.
U.S. inventories are near their highest level for 19 years and an estimated 100 million barrels of oil and refined products are held in floating storage as demand has dropped.
Kuwait, the world’s fourth-largest oil exporter, was not worried about high inventories, Sheikh Ahmad said, because the market was “working on sentiment rather than fundamentals.”
Sheikh Ahmad declined to say what he considered an ideal oil price but asked if the OPEC member would consider investing in output capacity at levels of around $70 per barrel he said: “Maybe at that level we’ll start investing.”
Asked if Kuwait might consider reviving a $17.4 billion petrochemicals deal with Dow Chemical that was scrapped last year, he said: “No no no. It is dead.”
The Gulf Arab decided in December to scrap the petrochemical joint venture with the largest U.S. chemicals company.
The new company would have marketed petrochemicals and plastics but the deal had angered some Kuwaiti parliamentarians who complained the project was not economically viable in light of the global financial crisis and slumping petrochemical sales.
Analysts said the cancellation raised fears that other industrial projects would be scrapped.
Reporting by Caroline Drees and John Irish, Writing by Lin Noueihed, Editing by Daliah Merzaban