Cairo
29 November 2008
OPEC on Saturday deferred a decision on a new oil supply cut until a
meeting in Algeria on December 17. OPEC member states have been meeting
in Cairo at an emergency session to discuss possible measures to stop
the steep, recent decline in world oil prices. For VOA, Edward Yeranian
reports for VOA from Cairo.
OPEC members delayed a decision on
whether to cut production again this year until December, giving them
more time to assess previous attempts to halt a plunge in prices.
According
to Chakib Khelil, the group's president, will carry out a "close
scrutiny" of the market in the run-up to a meeting in Oran, Algeria, on
December 17. Khelil told reporters after Saturday's Cairo meeting that
OPEC will "take any additional action" to "achieve market stability" at
that time.
OPEC called this "consultative" meeting of ministers
for Saturday rather than wait until its next scheduled conference in
Algeria, as the slowing world economy reduced global consumption faster
than expected.
OPEC members have a delicate balancing act to
perform as they strive to boost prices without overreacting in terms of
production cuts and being blamed for exacerbating the economic
slowdown.
Saudi Oil Minister Ali al-Naimi says that no cut will be made before next month.
He
says that Saturday's meeting is just for consultation and in preparation
of the next official meeting in Oran, Algeria, in December. Any
decision to cut production, he adds, will be made at that meeting after
studying the state of oil markets at that time, since it's too soon to
act, right now.
Al-Naimi also claims that most oil producing
nations are "respecting their production quotas, since it's in
everyone's interest to do so."
Al-Arabiya TV, however, says
that, ironically, the bloc of nations known as "hawks" for their
insistence on maintaining high oil prices, which include Iran,
Venezuela, Nigeria and Libya, "have been among the worst overproducers"
of the entire oil cartel.
Analysts say that Arab oil ministers
met, separately, before the official OPEC meeting, in a bid to shore up
ranks and to put pressure on those countries not respecting the current
official quotas.
Saudi King Abdullah told the Kuwaiti daily As
Siyassah, in an interview, Saturday, that he believes that $75 is a
"fair price for a barrel of oil."
Qatar's Oil Minister Abdallah
al-Attiyah also told reporters at Saturday's OPEC meeting that any
price below $70 a barrel would cause a "freeze" on investment in the
oil production sector.
He says that OPEC is waiting to see how
the global economic crisis plays out before making a decision on
production cuts, but that an oil price below the threshold of $70 to
$80 a barrel will cause a freeze on investment and that no money will
be put into new or existing wells, causing future production problems.
Analyst
Louis Hobeika, who is Professor of Economics and Finance at Beirut's
Notre Dame University, thinks that a production cut cannot really stem
the fall in prices, anyway.
"This is really now a demand driven
market, in the sense of suppliers cannot really do much to stop the
decline in prices and therefore it's difficult for them," he said. "Of
course, if they lower production by 5 million barrels a day, they will
impact."
"However, they cannot afford it, because their budgets are based
on very important, steady flows of income. So, on the one hand, they
like to push prices up, on the other hand, they cannot really do it
through a decrease in production, especially since they have tried it a
few weeks ago, and it didn't work," he added.
Oil prices have tumbled more
than 60 percent since their record highs last July, and even dipped
below $50 a barrel, last week. Friday's closing price of $54 a barrel
is a slight improvement for producers, but satisfies few at OPEC.
The
oil cartel cut production by 1.5 million barrels a day at its last
meeting on October 24 in Vienna, and seems to be hoping that producing
nations adhere to those quotas before being making any move to cut
production at the next meeting in Algeria on December 17.