International oil prices are set to remain fairly level for the remainder of 2011 with the Organisation of Petroleum Exporting Countries (Opec) likely to rein in production if oil prices tank on slowing economic growth, say experts.
They also say the loss of Libya's crude output has been priced in by the oil markets.
Gulf Opec countries will likely gradually reduce their output as Libya's production recovers towards pre-war levels after raising output to compensate for the Libyan loss, the oil group's Libyan Secretary General Abdullah Al Badri said yesterday, according to agency reports.
Saudi Arabia and its Gulf Opec allies, Kuwait and the UAE, have raised oil production over the last few months to make up for the shutdown of Libyan oil fields since February.
"We think that with Al Badri's estimate that oil prices are set to remain fairly level for the rest of the year, he is diplomatically putting the ball in Saudi Arabia's, the UAE's and Kuwait's side of the pitch," said Samuel Ciszuk, IHS Energy's London-based Senior Middle East and North Africa Energy Analyst.
"[This will] put the onus on them to start rolling back the volumes they unilaterally placed on the market following the troubled June meeting, before there is any need for the remaining group to take any action," he told Gulf News.
The Opec ministers are due to meet on December 14 to review the group's output policy. Crude oil futures in New York were trading above $85 (Dh312) a barrel, while Brent crude futures traded close to $112 a barrel yesterday despite growing concerns of the Eurozone debt crisis deepening.
"Oil slipped in early Asian trade yesterday on growing concerns that a sovereign debt problem in Greece may turn into a full-blown banking crisis, with a stronger dollar helping oil extend the previous session's losses," said Pradeep Unni, a Dubai-based commodity analyst.
"We think Libya is in a good position to recover to a 1-1.2 million barrels per day production level by around August next year, but the last stages to the pre-war 1.6-1.7 million bpd might take longer then end-2012 and perhaps well into 2013," Ciszuk added.
"The market started pricing in Libya's oil output as soon as it went off-stream and it has not yet started pricing in crude coming back, as we are not yet seeing Libyan crude hit the markets. The ‘risk premium' on Libya has been lowered, though, as a recovery looks more likely now than it did in say early-August."
The Paris-based International Energy Agency last week reduced 200,000 bpd off its world oil demand estimate for 2011, reducing it to 89.3 million bpd. For 2012, it estimated 90.7 million bpd.