OPEC ministers agreed to leave existing output targets unchanged out of concern for the global economy, but promised to enforce those curbs more strictly and said they would meet again at the end of May to review progress.
AFP - The OPEC oil cartel opted not to cut output at a meeting here Sunday, delaying the decision at least until May, to give rich and emerging nations time to respond to the global economic crisis.
The Organization of Petroleum Exporting Countries had been expected to cut output at its meeting here in a move to boost falling crude prices, despite concerns of consumer countries that higher oil prices would hurt their recession-hit economies even more.
In response, the 12-nation oil cartel chose to hold off from a further reduction in output, at least until an extraordinary meeting to be held on May 28.
"It's a rollover until May," Iraqi oil minister Hussein al-Shahristani told reporters after the meeting, using the technical term for the decision to hold output steady.
For Algerian energy minister Chakib Khelil, it was "a responsible position" that would "give the chance to the G20 to do its job on April 2. In light of the decision they will make, we'll make our decision on May 28."
The Group of 20 rich and emerging nations (G20) is to meet in London next month.
OPEC Secretary General Abdalla Salem El-Badri explained that the cartel could effectively tighten conditions on the oil market by making sure that member states fully adhered to cuts agreed last year.
The rate of "compliance" to those cuts was currently around 80 percent. By raising that compliance to 100 percent, it would take a further 800,000 barrels of oil a day out of the market, El-Badri said.
"If we have more compliance, we can reduce the overhang further. We've called another meeting in May. If something happens between now and May, we'll have to correct the market in May," El-Badri said.
OPEC has already slashed its output three times since September as crude prices slumped in the face of a worldwide economic slowdown.
At the last output meeting in December in Oran, Algeria, OPEC cut a record 2.2 million barrels per day from its output quota, bringing the total cuts over three meetings to 4.2 million barrels per day.
Venezuelan Energy and Oil Minister Rafael Ramirez said the problem was that countries had stockpiled too much oil and that was weighing on prices.
"The last decision in Oran was a huge cut of oil and now we're trying to follow that decision" with 100 percent compliance, Ramirez said.
"For that reason we are waiting up to March and after in May we can have better elements to evaluate the market situation."
In its closing statement, OPEC noted that the world economy "is in the midst of the worst global economic recession in decades" and that was having a "deep impact on world oil demand."
The cartel said the world economy was forecast to contract by 0.2 percent in 2009 and estimated that global oil demand would drop by 1.0 million barrels per day (bpd) in 2009 to stand at 84.6 million bpd.
Analysts said Sunday's decision could lead to a brief drop in oil prices when the markets opened on Monday, because participants had widely expected a cut in output.
"In the near term, we'll see some disappointment. Prices rallied on Thursday and Friday amid talk of a cut, so we could see a bit of a draw back tomorrow on profit-taking," said VTB Capital analyst Andrey Kruchenkov.
Dave Evans, an analyst at BetOnMarkets, agreed.
"With most analysts predicting a cut between 500,000 and one million barrels a day, today's OPEC decision not to cut could result in weaker oil prices when markets open tomorrow," he said.
Oil prices remain more than 100 dollars below the historic heights scaled last summer, and traded at about 45 dollars per barrel on Friday.
The gathering of ministers from OPEC, whose members pump around 40 percent of the world's crude supplies, was also attended by non-member Russia.
Russia said Sunday it had discussed sending a permanent observer to OPEC, deputy premier Igor Sechin told a meeting of OPEC ministers.
Russia rivals Saudi Arabia as the world's largest oil producer and has been deeply affected by the plunging prices.
OPEC comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq does not have an output quota due to unrest in the country.
Date created : 2009-03-15