Considering Production Quotas Again : OPEC May Scrap Pricing Strategy

OPEC ended a third day of talks Tuesday by indicating that it was ready to scrap a failing campaign to capture oil sales by dropping prices, but it remained uncertain whether the cartel could agree on a strategy of production cuts.

The enormous problems confronting the Organization of Petroleum Exporting Countries were further complicated by non-member Britain, which announced that it did not intend to cut production despite a worldwide oversupply that has halved oil prices to about $15 a barrel since late last year.

Arturo Hernandez Grisanti, the Venezuelan oil minister and OPEC’s president, said late Tuesday that no decisions had been made. He said the meeting would resume Wednesday after OPEC ministers met with representatives of several non-OPEC oil-producing nations.

While the price collapse has benefited the industrialized world, most oil producers are suffering a drastic decline in earnings, and some face financial crises unless the slide is reversed.

Emissaries from OPEC’s 13 members were meeting in a tortuous atmosphere of secrecy and fractious differences, and reporters tried to discern what direction the summit was taking from a few public remarks by influential delegations.

The most direct came from Kuwait’s oil minister, Ali al Khalifa al Sabah, who said a majority of OPEC leaders were ready to abandon their strategy to win a bigger share of the world oil market by driving down prices. He said the delegates were considering reversion to a price-support strategy that calls for new cuts in OPEC production.

If this switch were adopted, prices could be expected to rebound at least temporarily, industry analysts have said. But it was highly uncertain whether OPEC ministers could agree on the size of production cuts and an allotment of national quotas.

Grisanti told reporters after Tuesday’s session ended that he remained confident OPEC could “gradually take decisions” on the key questions of how to lift oil prices and set production limits.

The Venezuelan said an OPEC delegation would meet Wednesday morning with representatives of five non-OPEC nations, Mexico, Malaysia, Egypt, Angola and Oman, to discuss “ways and means of stabilizing the price and to restore the price.”

Grisanti said the OPEC ministers would reconvene their conference after meeting with the five independent producers. He said he could not predict how long that meeting would last.