The Organization of Petroleum Exporting Countries announced Friday that it will work with non-OPEC producers to restore the price of oil to $28 a barrel, which was the cartel's base price before prices began to plummet.
But, after six days of discussion and at times heated wrangling, the oil ministers of the OPEC countries gave up trying to reach any agreement on lower production quotas that would give meaning to their goal. All they could achieve was a vague promise to "adopt a series of measures that will be made public in due time."
Thus, nothing has come of this meeting that is likely to have any effect on the oil market, where abundant supplies have pushed down the price to between $12 to $15 a barrel. Before the meeting began, the Saudi Arabian oil minister, Ahmed Zaki Yamani, said the price could drop to $8 a barrel unless the producers moved to reduce production.
The ministers will meet this morning to set a date for a follow-up meeting in a month to six weeks.
Burst of Trading
Despite OPEC's apparent failure to make much headway, initial reports that a consensus had been reached on how to get prices back to $28 sparked a burst of trading and higher prices for oil futures contracts on the New York Mercantile Exchange.
The price for a barrel of Texas crude oil delivered in May closed up 92 cents at $13.94 on Friday. But analysts predicted another tumble once it becomes clear that little progress was made in Geneva, and many remained skeptical that any agreement would last long anyway.
"If this turns out to be all smoke, the market's going to take a run at $10," said John Hill, vice president at Merrill Lynch Futures.
Of the $28-per-barrel figure, analyst Peter C. Beutel of Rudolph Wolff Futures said: "That number is so far on the horizon that it's difficult to even see it. OPEC has shown remarkably little ability in applied mathematics."
Defend $28 a Barrel
At the conclusion of the meeting Friday, Arturo Hernandez Grisanti, Venezuela's oil minister and current president of the 13-member organization, issued a statement that said:
"We have decided to defend a price structure of $28 per barrel, and all measures will be taken to gradually reach this level again. OPEC as well as non-OPEC countries will each decide on the most convenient approach. The important fact is that all producers are now committed to regain the stability of the markets."
In fact, not all of the oil producing nations are committed. The only non-OPEC states to join in this effort are Mexico, Egypt, Malaysia, Oman and Angola. Britain and Norway, jointly pumping almost as much oil as Saudi Arabia produces, are refusing to cut production.
Market forces will therefore continue to determine the price of oil for some time. An oil market expert here as an observer commented that if OPEC had said that it wanted to restore the price to only $20 a barrel, then it might have been taken seriously, but nobody would believe $28 a barrel.
Times staff writer Donald Woutat in Los Angeles contributed to this story.