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Peg Mackey, Barbara Lewis05 Mar 2008 17:29
Ministers of the Organisation of the Petroleum Exporting Countries (Opec) on Wednesday agreed to keep oil output steady and said record high prices had been driven by factors that were beyond their control.
United States crude hit a record of $103,95 a barrel on Monday and was trading above $101 on Wednesday.
The world’s biggest fuel burner, the US, had said even a token supply increase from Opec would help to tame prices and limit any impact on a fragile world economy.
But Opec ministers argued the oil market was driven by a weak dollar, speculation and political strife, and not by a lack of crude.
“Yes, the production will not be changed,” Iraqi Oil Minister Hussain al-Shahristani told reporters as he emerged from Wednesday’s meeting.
Nigerian Minister of State for Oil Odein Ajumogobia said earlier he believed output should be kept steady, but that oil above $100 was uncomfortable and above $80 a barrel was high.
“The Opec official position has been anything above $80 is on the high side,” he told reporters.
Wednesday’s no-change decision could still allow for quiet shifts in Opec production.
Top exporter Saudi Arabia has consistently pledged to keep the market well-supplied with oil.
Saudi Arabian Oil Minister Ali al-Naimi said the kingdom had been pumping 9,2-million barrels per day (bpd) “day in, day out”, which is roughly 300 000 bpd above its formal Opec output target.
“What Opec does not want, especially Saudi and the Gulf countries, is to actually be seen as one of the main reasons why the global economy goes one way or other,” said Samuel Ciszuk, analyst at Global Insight.
Washington said on Tuesday a modest Opec output increase of 300 000 bpd to 500 ,000 bpd could calm prices and help to limit any economic damage.
“I think it’s a mistake to have your biggest customer’s economy to slow down ... as a result of high energy prices,” US President George Bush said on Tuesday.
Opec last decided to raise its production in September 2007 and that decision did not halt the oil-price rally, noted Opec president Chakib Khelil of Algeria, who was among ministers who had said there was a case for an output cut.
He said crude stock levels could build during the second quarter when consumption typically tapers off and any seasonal decline could be exaggerated by the impact of economic slowdown.
Opec’s next scheduled meeting will be on September 9.
But the exporter group’s 13 members, who pump more than a third of the world’s oil, could reassess the market at producer-consumer talks in Rome on April 20 to 22.—Reuters
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