Get more Mail & Guardian
Subscribe or Login

Opec poised to keep output steady, US unhappy

Opec ministers are poised to hold output steady at a meeting on Wednesday, resisting pressure from top consumer the United States to pump more oil to help prop up a fragile economy.

Opec has said triple-digit oil has been driven by factors beyond its control, such as a weak dollar and speculation and not by any lack of fuel.

Washington believes even a token supply increase from the Organisation of the Petroleum Exporting Countries would help to tame a rally that took oil to a record $103,95 on Monday.

But Opec ministers, including those closely allied with the United States, see things differently. Most want to hold output steady and a minority wants a cut.

The group’s most influential minister Ali al-Naimi of Saudi Arabia said in an interview published on Wednesday there was no need to change output because market fundamentals were healthy.

In his first public comments since arriving in Vienna, he said the oil price rally was the result of ”tremendous speculation”.

”This speculation has no link to the stable market fundamentals, which do not need any action,” the al-Hayat newspaper quoted Naimi as saying.

”Why then should any new action be taken if the health of the market that we follow … is sound?”

Opec’s president Chakib Khelil of Algeria also told Reuters early on Wednesday he expected output policy to stay unchanged.

”As far as I know there is nothing new,” he said.

Lower demand, higher stocks?

But Khelil and other ministers have predicted stock levels could build during the second quarter when consumption typically tapers off following the end of winter.

He has also said a seasonal decline in demand could be exaggerated by the impact of economic slowdown.

Concerns about the US economy have already helped to pull oil prices down from the record hit at the start of the week.

Early on Wednesday, US oil futures were trading below $100 a barrel.

Washington says Opec must raise production by a modest 300 000 barrels per day (bpd) to 500 000 bpd to contain 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,” United States President George Bush said on Tuesday.

Opec numbers among its members staunch US allies, such as Saudi Arabia, Kuwait and Qatar, but also Iran and Venezuela, which are hardened foes of Washington.

”Bush is wrong. Always,” said Venezuelan Oil Minister Rafael Ramirez.

The exporter group’s 13 members, who pump more than a third of the world’s oil, could have an opportunity to reassess the market at producer-consumer talks in Rome on April 20 to 22. – Reuters

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

Mbeki tells ANC that land without compensation goes against the...

‘This would be a very serious disincentive to investment,’ says Thabo Mbeki in a document arguing that the ANC should not proceed with the Constitutional amendment of section 25

Micro-hydropower lights up an Eastern Cape village

There is hidden potential for small hydropower plants in South Africa

More top stories

SIU freezes R22-million in Digital Vibes accounts

The Special Investigating Unit said it would ask the tribunal to declare the health department’s contract with the company unlawful

Life-saving free train travel offered to domestic abuse victims in...

A pioneering railway scheme in the UK is helping domestic violence victims to escape their abusers by providing them with free travel to reach refuge

Oral submissions to inquiry on local government elections start next...

The hearings will be open to the media and the public, under strict level-three regulations

Education employees queue for Covid jabs, but some may have...

People who have had Covid-19 in the past 30 days or who have had a flu shot in the past 14 days will be vaccinated at a later date

press releases

Loading latest Press Releases…