The Organisation of the Petroleum Exporting Countries (Opec) left unchanged its oil-production ceiling on Friday, snubbing United States demands for an increase as the cartel focuses on supporting prices that have fallen 10% since the start of the year.
Explaining its decision, Opec said that stockpiles of crude were likely to increase in the first half of 2008.
“In view of the current situation, coupled with the projected economic slowdown, the conference agreed that current Opec production is sufficient to meet expected demand for the first quarter of the year,” the group said in an official statement.
“At the same time, however, the conference noted that the significant uncertainties associated with the projected downturn in the global economy called for vigilant attention to their impact on key market fundamentals [of supply and demand] until its next Meeting on March 5 2008,” it added.
Opec, which pumps 40% of world oil, decided to keep official daily output at 29,67-million oil barrels.
A freeze is a snub to the US after President George Bush recently urged Opec to increase output to help bring down high oil prices that stunt economic growth and fuel inflation.
However, lower oil prices are not welcomed by crude producers as their export income drops.
Since striking a high above $100 at the start of the year, the price of oil has slid owing to fears of a US recession and a global economic slowdown. But crude futures are still almost double the level of a year ago.
A US recession would dent demand for crude in the world’s biggest energy market and send oil prices sliding further, Opec fears.
Kuwait’s acting oil minister, Mohammed al-Aleem, had said on Thursday that the 13-member Opec was “a little worried about the impact of a slowdown or a recession in the United States” on oil prices.
“The price, for the time being, has been going a little bit down,” he said.
“Within three weeks, it’s been about $10. We have to see why, what the problem is, and whether it’s going to continue at the same pace.”
New York’s main oil futures contract, light sweet crude for delivery in March, was four cents lower at $91,71 per barrel following Opec’s output decision. On Thursday it had briefly ducked below $90.
These levels compare with a record high of $100,09 reached on January 3.
“We have no option now” but to hold output, Qatar Minister of Energy and Industry Abdullah bin Hamad Al Attiyah had said on his arrival in Vienna on Thursday.
“We are very concerned about the world economy … The American economy will [influence] oil prices,” he told reporters.
Opec’s meeting on Friday was an extraordinary get-together that was scheduled at the group’s last official gathering on December 5 in Abu Dhabi.
There, Opec decided against increasing production, insisting the market was well supplied and that high prices were caused by speculative activity, not a reaction to the demand and supply situation.
The next Opec meeting is due next month in Vienna.
Opec comprises Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
Iraq is the only member without an output quota owing to unrest in the country, while analysts say Opec is in fact producing above its official ceiling by about 180 000 barrels of oil each day. — AFP