OPEC Ministers Meet Under High Stakes
Terror attacks on the United States together with fears of a significant slowdown in the global economy create a backdrop of uncommon urgency for an OPEC oil ministers meeting this week to review their crude production quotas.
As suppliers of about 40% of the world’s oil, members of the Organization of Petroleum Exporting Countries have the power to help shore up the buckling global economy--or speed its descent into recession.
Stakes are high for Wednesday’s meeting in Vienna--a meeting some OPEC delegates and energy analysts earlier had envisioned as little more than a ritual of kaffee klatsches in four-star hotels followed by the customary rubber-stamping session at OPEC headquarters.
In the wake of the Sept. 11 attacks on New York and the Pentagon, some analysts say OPEC members might discuss reversing this month’s cut in output of 1 million barrels a day--though the cartel probably will renew its existing quotas.
“OPEC doesn’t need to do anything. What OPEC should avoid doing now is to cut production to get prices back up again. If they did, they would make a recession worse,” said Leo Drollas, chief economist of the Center for Global Energy Studies in London.
OPEC has a production target of 23.2 million barrels a day, after having slashed its official production this year by a total of 3.5 million barrels a day in an effort to keep prices firm.
Energy Secretary Spencer Abraham met last week in Vienna with OPEC Secretary-General Ali Rodriguez to convey President Bush’s hope that the group would take no action that would drive up prices or threaten supplies should the United States retaliate for the terrorist attacks of Sept. 11.
Oil prices spiked to more than $31 a barrel after hijacked airliners plowed into the World Trade Center and Pentagon. Prices eased later, as concerns about shriveling corporate profits and massive job cuts foretold a drop in demand for oil.
Front-month futures contracts of Europe’s benchmark crude, North Sea Brent, finished trading Friday at $25.44 a barrel, down 18.1% from a Sept. 11 high of $31.05. Contracts of light, sweet crude for November delivery closed at $25.97 on the New York Mercantile Exchange, which closed immediately after the attacks on the World Trade Center.
OPEC’s own benchmark--the average price for a so-called basket of seven crudes--was $24.51 a barrel Thursday, the most recent day for which the group compiled information.
