CARACAS, 3 June 2006 — The OPEC group agreed Thursday to keep its oil output at a 25-year high, but warned it would watch for any signs of a global slowdown that might merit a cut in the months ahead.
At their latest talks here, ministers of the Organization of the Petroleum Exporting Countries decided to maintain the group’s total official production cap at 28 million barrels a day. They also informally discussed expanding OPEC to take in Angola, Sudan and possibly Ecuador.
Analysts say the group risks losing its grip on world oil supplies unless it finds fresh sources of production, to counterbalance the rising output of non-OPEC nations such as Russia, Norway, Canada and Mexico.
In a statement, OPEC ministers said they “decided to retain the status quo”, leaving their output at the highest level in a quarter century. But OPEC also “reaffirmed its determination to ensure that crude oil prices remain at acceptable levels” that are neither too high nor too low.
“We haven’t achieved the stability we are seeking. We take steps and watch the market,” OPEC’s current president, Nigerian Oil Minister Edmund Daukoru, told a news conference. OPEC may face a more testing decision at its next scheduled meeting, on Sept. 11 at organization’s headquarters in Vienna, if oil prices come down from highs above $70 a barrel.
The OPEC ministers said they would hold an extraordinary meeting before September “should market conditions so warrant”.
Many analysts predict the US and other big economies face slacker growth going forward, as interest rates are jacked up to ward off inflation brought about by sky-high energy prices. However, OPEC members argue that oil supplies are plentiful. They blame the tensions over Iran and unrest in Nigeria, sub-Saharan Africa’s biggest crude producer, for sparking a frenzy of speculation on the market.
Venezuela had been pushing for reduced output to keep a floor under prices, but the idea received no support from the Gulf states, including Saudi Arabia, that dominate the 11-nation cartel.
Phil Flynn, energy analyst with Alaron Trading in Chicago, said a reduction could be on the cards if OPEC decides to protect surplus income bonanza its members have reaped in recent years. “I would not be surprised that they might start laying the groundwork for a cut in output after the (US) summer driving season,” he said.
The annual peak season for gasoline demand in the world’s largest energy-consuming nation began this week and ends on Labor Day on Sept. 4.
OPEC also mooted its first expansion since Nigeria joined in 1971.
“We welcome any producing and exporting country that wants to join,” Minister of Petroleum and Mineral Resources Ali Al-Naimi said.
However, delegates indicated that Ecuador’s participation was more a hobbyhorse for Venezuela, OPEC’s only Latin American member, and that Angola and Sudan stand a better chance for now.