OPEC to Maintain Current Output
OPEC agreed Thursday to leave oil output unchanged near its full capacity, rejecting a suggested cut by host Venezuela, the cartel’s leading price hawk.
The Organization of the Petroleum Exporting Countries worries that $70-a-barrel crude could backfire on it by slowing global economic growth.
“We are not comfortable with prices at such levels because they are not supported by fundamentals and contain within them the seeds of further volatility that ultimately will be to the detriment of all,” said OPEC President Edmund Daukoru of Nigeria.
With official production quotas at 28 million barrels a day, OPEC’s leverage in world oil markets has become limited because its members can pump little more than they are now. Refinery bottlenecks, Iran’s standoff with the West over its nuclear program, supply disruptions in Iraq and Nigeria and a rush by investors into commodities have fueled the price of crude.
Saudi Oil Minister Ali Ibrahim Naimi said world oil markets were “oversupplied and overpriced.”
Venezuela had argued that world oil inventories were in surplus and OPEC should consider reducing output to prevent a price slump. Venezuelan President Hugo Chavez, in a speech to oil ministers that broke with OPEC protocol, accused Washington of trying to destroy OPEC, criticized the American way of life as a waste of energy resources and hailed OPEC as a defender of the Third World against imperialism.
“For a century we gave away oil to slake the thirst of developed countries while our people in Africa, Asia and Latin America sank into underdevelopment, misery and backwardness,” Chavez said.
Such rhetoric makes some in OPEC uneasy. Since the 1970s, it has worked to avoid politics and build a businesslike reputation as a reliable oil supplier.
“Politics is anathema to OPEC. They prefer to avoid it at all costs,” said consultant Gary Ross of New York’s PIRA Energy.
Chavez has championed a campaign for Latin American energy producers to claim a greater share of booming oil profits from foreign investor companies.
