Opec to maintain oil output level
The organisation shrugs off US calls to pump more oil to bolster its slowing economy.
But the 13-nation organisation would not be swayed from arguments that supplies were adequate and that speculators and geopolitical jitters, not oil availability, were setting prices.
Instead, it focused on near-term expectations: the likelihood of less demand as the Western hemisphere‘s heating season ends and before its summer driving season begins; the prospect of more barrels both from Opec and non-Opec nations; and fears that the market will shrivel if economic woes worsen.
“In view of the current situation, coupled with the projected economic slowdown … current OPEC production is sufficient to meet expected demand for the first quarter of the year,” a statement summing up Friday’s meeting of Opec oil ministers said.
That left open the question of the second quarter, from April to June.
And while the ministers avoided discussion of what Opec’s next meeting on March 5 would do, underlying sentiment for reducing output was already apparent.
Expressing concern about the financial crisis in the US and its impact on the world economy in the medium and long term, Chakib Khelil, the Opec president, told reporters: “It will probably have some impact on demand.”
Even before Friday’s meeting wound down, Gholam Hussein Nozari, Iran’s oil minister, told reporters: “We think there should be cutting in production.”
Venezuela, another OPEC price hawk, said it might swing behind Tehran.
US reaction
George Bush, the US president, had led administration lobbying for an increase in output to cool prices. The US response to Friday’s decision was measured, however.
“I think everyone is fully aware that having a reliable and steady and predictable supply of oil is a benefit to the global economy,” Tony Fratto, a White House spokesman, said.
“We hope that they understand that their decisions on oil production have a real impact on the economy,” he said.
Prices dropped below US$90 a barrel on Friday despite the bullish implications of keeping production steady, after the US government said employers cut jobs in January, renewing worries that a possible US recession will eat into oil demand.
Light, sweet crude for March delivery lost US$1.79 to US$89.96 a barrel on the New York Mercantile Exchange.