Saudis, OPEC Partners Still Split Over Plan to Curtail Production
Saudi Arabia clashed with its OPEC partners Friday over a common strategy for limiting oil supplies.
Outside oil industry analysts have said that if the Organization of Petroleum Exporting Countries cannot reach a secure, longstanding policy for restraining output, oversupply will likely depress prices.
Ahmed Zaki Yamani, the Saudi oil minister, told reporters that the OPEC meeting, in its 12th day, had reached a “difficult stage,” a description he often uses to signal major conflict in negotiations.
The deliberations were adjourned until this afternoon, and Libyan Oil Minister Fawzi Shakshuki said there had been “good progress.” None of the ministers would give details.
The talks were further complicated by a debate over how and when to reinstate a unified OPEC pricing structure, according to sources who asked not to be named.
The cartel’s price system was unofficially abandoned last fall, and since then each member has taken a free-market approach.
Friday’s talks addressed returning to fixed prices but no conclusions were reached, the sources said.
Shakshuki told reporters there was a consensus within OPEC to work toward an unspecified fixed price by the end of next year. But it remained to be seen whether the ministers would pursue an accord on this.
Yamani, whose country produces the most OPEC oil, emerged briefly from the talks to speak with reporters for the first time since the conference opened Oct. 6.
Asked about extending OPEC’s current production controls--favored by a majority of the members--he said: “We are not here for an extension.”
Other members have argued that by extending the accord, due to expire Oct. 31, OPEC would gain more time to negotiate.
OPEC’s current accord, in effect since Sept. 1, halted a steep decline in world oil prices. It limits the production of each member except Iraq. Saudi Arabia and Kuwait are eager to replace it with a new, ironclad agreement that would allow them to increase their output.
Oil futures prices on the New York Mercantile Exchange rose in heavy trading Friday. Futures prices for immediate delivery of West Texas Intermediate, the benchmark U.S. crude, jumped 25 cents a barrel to $14.78.
Oil was under $10 a barrel shortly before OPEC announced its temporary controls Aug. 5. Stephen Smith, analyst at Data Resources Inc. in Lexington, Mass., said oil prices will likely fall to $10 a barrel or less if OPEC adjourns without an agreement.
