The Organisation of Petroleum Exporting Countries will be focusing on finding a way to keep the price of oil stable as its members meet in Vienna on Wednesday.
The Organisation of Petroleum Exporting Countries will be focusing on finding a way to keep the price of oil stable as its members meet in Vienna on Wednesday.
Opec president Chakib Khelil and other ministers have said the organisation will not change its production or pricing policies yet as the price of crude continues to slide. Khelil said the main concern was to keep oil prices and supplies stable even as the United States prepares for military action against Afghanistan and Osama bin Laden, who has been regarded as the main suspect in the terrorist attacks in the United States.
“Opec is an organisation of the world, and we are extremely preoccupied and concerned about the world economy,” said Saudi Arabia’s Oil Minister Ali Naimi.
Opec’s benchmark price for crude has dropped by 25 per cent in 11 days to R174 a barrel. The ministers said they would defend their established target price of R212 a barrel, but prices dropped below R187, Opec’s minimum acceptable price for a barrel of oil, in trading in London and New York on Tuesday.
“When it starts, it’s very difficult to stop it, but you have to try,” said Abdullah bin Hamad Al Attiyah, oil minister for Qatar.
But some Opec oil ministers fear that cascading oil prices might trigger a rout as in December 1998, when crude dropped to R85 a barrel. “I think we shall study the present situation and the present developments in the market, and we shall try to defend the R212 target,” said Obaid bin Said Al-Nasseri, oil minister for the United Arab Emirates.
Opec appeared unlikely to adjust its target price to reflect the latest market situation. Al-Attiyah of Qatar also insisted that Opec would try to “defend” its existing target price, but said it could not do so by itself.
Saudi Arabia’s Naimi also did not think it would be easy. “We recognise that Opec doesn’t really control the price. You know who determines the price. It’s in the market,” he said.
Khelil blamed speculators for Monday’s big sell-off and said that prices should recover when demand for heating oil kicks in as autumn begins in the northern hemisphere.