Opec likely to hold production

2008-02-01 12:57

Vienna - The Organisation of Petroleum Exporting Countries (Opec) is likely to leave its oil production ceiling unchanged, snubbing US demands for a hike, as the cartel looks to support crude prices, which are tumbling on fears of an economic slowdown.

"It's very likely that they are not going to do anything" at their meeting, said Bill Farren-Price, an analyst at Medley Global Advisors.

Crude futures ended down on Thursday, closing at $91.75 a barrel in New York, after falling to as low as $89.58 at one point.

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

Opec members, who pump 40% of world oil, said on Thursday that they wished to see official daily output kept at 29.67 million oil barrels.

A snub to the US

A freeze would be a snub to the United States, the world's biggest energy consumer, after President George W Bush recently urged Opec to hike 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.

"We have no option now" but to hold output on Friday, Qatar's minister of energy and industry Abdullah bin Hamad Al Attiyah 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.

Kuwait's acting oil minister, Mohammed Al-Aleem, told reporters 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.

Price dropping

"The price, for the time being, has been going a little bit down," he said.

"Within three weeks, it's been about $10. We have to see why, what the problem is, and whether it's going to continue at the same pace."

Opec president and Algeria's energy minister Chakib Khelil indicated that the cartel could discuss at its meeting whether a hike would help to support the world economy.

He said some members of Opec were "more sensitive to political pressure," in an apparent reference to the Gulf States and Saudi Arabia, which were more likely to listen to US complaints about high prices.

However, Venezuela's minister of energy and petroleum, Rafael Ramirez, said he would call for a cut in output at Opec's scheduled meeting in March should prices continue to fall.

On Wednesday, Opec kingpin Saudi Arabia, the world's biggest crude producer, voiced satisfaction at the present levels of crude supply and demand.

"The fundamentals are sound," Saudi oil minister Ali al-Nuaimi had told reporters, as he expressed his views on the current demand and supply situation for crude oil.

- Sapa-AFP