OPEC Members Meet To Set Strategy to Counter Falling Prices
GENEVA (AP) _ OPEC ministers met today to map out a strategy for stabilizing oil prices amid new warnings they could plunge several more dollars if the cartel fails to act against overproduction.
An internal OPEC report estimates prices will rebound only if the 12 nations of the Organization of Petroleum Exporting Countries slash oil output by more than 1 million barrels a day.
The study, drafted by OPEC’s executive staff, was given to oil ministers arriving for a strategy session on spring production levels. Portions of the report were confirmed by sources, who spoke on condition of anonymity.
Analysts doubted that support could be mustered within OPEC for a sizable cut that would mop up excess crude on the market.
Nigerian Oil Minister Don Etibet said it would be ″quite dangerous″ for the cartel to act alone. ″We are not coming here to massacre ourselves.″
Oil prices have been around $5 a barrel below levels of a year ago and have been trading near five-year lows since winter. An OPEC marker was $13.41 a barrel on Thursday, far off the group’s $21 target.
Low prices are blamed on a world oil glut. OPEC is producing about 300,000 barrels a day above its agreed daily cap of 24.5 million barrels. Non-cartel producers, like Britain and Norway, also are pumping more than expected.
The study said prices would tumble if the ministers decided to extend the current output cap, ″which could even lead to single-digit prices.″
A cut of nearly 1.5 million barrels a day would be needed over the next six months to push prices higher, the report found.
Demand for oil is normally sluggish in spring with warming weather in the United States and other oil-consuming nations.
″It’s critical we ... do something,″ said Libya’s oil minister, Abdalla Salem El-Badri.
But El-Badri, like most others arriving for the meeting at a luxury hotel in Geneva, declined to say whether he would support an output cut.
Several non-cartel producers have signed a letter offering to trim production as part of an overall effort to boost prices. Among those endorsing the letter were Russia, China, Egypt, Yemen, Malaysia, Syria, Brunei and Oman. Britain and Norway did not sign it, officials said.
OPEC decided against cutting output last November because it feared a reduction would be offset by increased pumping from outsiders - meaning OPEC had given up some of its market to others.
During the ministers’ opening round of talks, Saudi Arabia’s influential oil minister, Hisham Nazer, raised questions about the impact of any reduction in output, delegates said.
Nazer, whose country is the world’s largest crude exporter, asked whether all OPEC nations would go along with a cut and whether non-OPEC countries would follow suit. Delegates said he did not propose an output cut.
OPEC members are Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.