OPEC Agrees to Maintain Its Oil Production Targets

The Organization of Petroleum Exporting Countries agreed Friday to maintain its oil production targets through June, saying prices would have to rise another 20% before members boost output.

The group’s price benchmark needs to top $28 a barrel before members reverse supply cuts, OPEC President Rilwanu Lukman said. The cartel’s average oil price currently stands at $22.79, just within the group’s desired range of $22 to $28.

But oil ministers from Saudi Arabia and Iran, OPEC’s biggest producers, also said they may be willing to sell more oil after June to avoid fears of shortages.

OPEC nations are seeking higher prices to shore up state budgets that rely on oil sales for as much as 90% of revenue. Demand for oil is rising at a rate only half that of the 1990s. But higher prices will only curtail economic growth, some analysts warn.

Oil prices have jumped this year, with near-term crude futures in New York closing Friday at $24.51 a barrel, up from $19.84 on Dec. 31.

But oil ministers, meeting here Friday, said prices are inflated by $2 or more a barrel because of traders’ concern that the U.S. may attack Iraq as part of its war on terrorism, disrupting Middle East oil shipments.

A $10 increase in the price of crude oil can add 0.5 percentage point to the U.S. index of consumer prices and shave economic growth by a similar amount, the Organization for Economic Cooperation and Development estimates.

OPEC members, however, say they are anticipating that the rise in prices so far won’t interfere with a global economic recovery this year.

“We have a range between $22 and $28” for oil prices, Lukman said. “So why should we raise [output] if it’s not above $28?”