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Gulf producers will push to keep oil output unchanged at Opec's meeting today after a sharp rise in prices and will urge better adherence to production quotas, analysts said.
Major Opec producer Saudi Arabia along with the UAE, Kuwait and Qatar - happy with the current prices - will seek to reduce overproduction by urging the group to comply with output quotas agreed in December, they said.
"Their first priority will be to maintain output levels. Every producer is happy at the current oil price. They never expected prices to rebound to this high level so fast," Kuwaiti oil analyst Kamel Al Harami said.
Oil prices, which peaked above $147 in July last year before tumbling to $32 in December, have doubled since the start of 2009 and touched the $75 mark last week for the first time in 10 months.
Kuwait's Oil Minister Shaikh Ahmad Abdullah Al Sabah said in August that Opec should maintain its output levels because prices were satisfactory.
He also hoped oil prices would remain between $70 and $80 a barrel.
The Organisation of the Petroleum Exporting Countries, which pumps 40 per cent of global oil supplies, is due to meet in Vienna this morning, when ministers will review its overall production ceiling.
The target level was reconfirmed in May at 24.85 million barrels a day excluding Iraq's output, currently around 2.5 million bpd.
The Vienna meeting is not expected to raise production quotas because that would undermine prices nor to cut allocations since this would seriously hamper global economic recovery, the analysts said.
"It seems there will be little scope for Opec to raise production without putting pressure on prices, at least during the first half of 2010," Saudi Samba banking group said in its August economic report.
Mr Al Harami said that if Opec slashes output 'it will seriously harm the world economic recovery' which will subsequently put pressure on oil prices.
"Markets appear torn between weak fundamentals and fluctuating sentiment on the prospects for a global recovery. Further volatility is likely," Samba said.
Following the slump in oil prices late last year and early in 2009, most economic forecasts predicted Gulf nations' budgets for this year would go into the red for the first time since 2002.
The subsequent recovery on petroleum markets means budgets are headed for yet another surplus if oil prices stay above $60 a barrel which will be a boost for Bahrain too.
The other main challenge to OPEC is compliance with production cuts. According to latest available data this has slipped to around 70 per cent from well over 80 per cent a few months ago.
The big four Gulf oil nations pump about half of Opec's current production of just under 29 million bpd including Iraq and are believed to be complying with their production quotas, Kuwaiti economist Hajjaj Bukhdur said.
"Oil prices will depend on the world economy. I believe Opec production and oil prices will remain at the current level through the second quarter next year, barring exceptional developments," Mr Al Harami added.
