OPEC freezes oil output amid cooler prices

OPEC freezes oil output amid cooler prices
(AFP) 1 February 2008

VIENNA - OPEC left unchanged its oil production ceiling on Friday, snubbing US demands for an increase as the cartel focuses on supporting prices which have fallen 10 percent since the start of the year.


‘We all agreed to keep things as they are,’ Nigeria’s Minister of State for Energy, Odein Ajumogobia, told reporters following conclusion of OPEC’s meeting in the Austrian capital.

Saudi Arabia, the oil cartel’s most influential member and the world’s biggest producer of crude, said on going into the meeting that it saw no need to change official output of the Organisation of Petroleum Exporting Countries.

‘Had there been a need to take any measures concerning supply and demand, we would have taken them. But the current situation shows that the market fundamentals are sound,’ Saudi Arabian Oil Minister Ali Al Nuaimi told the pan-Arab daily Al Hayat in an interview published on Friday.

OPEC, which pumps 40 percent of world oil, decided to keep official daily output at 29.67 million oil barrels.

A freeze is be a snub to the United States after President George W. 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 dollars 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 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 dollars. 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 41 cents lower at 91.34 dollars per barrel following OPEC’s output decision.

This compared with a record high of 100.09 dollars reached on January 3.

‘We have no option now’ but to hold output, Qatar’s 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.