LONDON, 2 March 2004 — With world oil prices shooting up, OPEC ministers are hinting at a possible reversal of the group’s decision to cut output quotas next month.
At its meeting in Algiers on Feb. 10, the Organization of Petroleum Exporting Countries pledged to cut its combined output quota of 24.5 million barrels per day (bpd) by one million bpd from April 1. The 11-nation organization also agreed to eliminate by the end of March production above the quota, with the excess estimated at 1.5 million bpd. “If prices continue at their current high level, OPEC countries are determined to revise their previous decision,” United Arab Emirates Oil Minister Obeid ibn Saif Al-Nassiri said Saturday, quoted by the official WAM news agency.
But Nassiri’s words had no impact on the market as prices continued to rise yesterday, said Societe Generale analyst Frederic Lasserre in Paris.
“What’s certain is that OPEC will find it difficult to justify cutting its quota at its next meeting in March should prices stay at their current level,” he said.
The next scheduled OPEC meeting is at the Vienna headquarters on March 31. Yesterday in London, the price of benchmark Brent North Sea crude oil for April delivery stood at $32.3 per barrel, its highest level for almost a year.
The price of the OPEC basket of seven crudes stood at $31.13 a barrel on Friday, above the organization’s declared target range of $22-$28 per barrel and a 10 percent rise since the cartel decided to cut its output quota.
New York’s benchmark light sweet crude April contract slipped back 26 cents to $35.90 in early deals.
OPEC’s pledge to cut production was prompted by worries about a sharp decline in oil prices once spring comes to the northern hemisphere, bringing a fall in demand for winter fuels.
But prices have so far remained supported by traders’ worries that there will be insufficient gasoline for the northern hemisphere summer when US motorists embark on their so-called driving season.