VIENNA: OPEC ministers geared up yesterday for a meeting this week end to decide if further cuts in oil output are needed to prop up falling crude prices in a recession-strapped global economy.
Ministers from the Organization of Petroleum Exporting Countries, who convene formally tomorrow, have voiced concern that oil prices could slide further as global demand for crude ebbs in the current worldwide downturn.
As a result, OPEC may reduce output again, analysts said.
Kuwaiti Oil Minister Sheikh Ahmad Abdullah Al-Sabah, speaking to the official KUNA news agency before he headed to Vienna, said all options were open for tomorrow’s meeting.
Not all countries were in favor of a cut in output, the oil minister said, without specifying further.
“OPEC’s decision will be taken collectively and not individually,” he said.
“We are for the prices that achieve the needs of the exporting nations’ budgets and at the same time that suits the needs of the global economy,” Sheikh Ahmad said.
Oil prices surged Thursday as the market eyed more possible cuts to OPEC’s output despite tumbling energy demand.
Crude futures edged higher yesterday, with New York’s main futures contract, light sweet crude for delivery in April, climbing 41 cents to $47.44 a barrel.
In London, Brent North Sea crude for April rose 70 cents to $45.79 a barrel, having risen almost $4 on Thursday.
In Paris, the International Energy Agency (IEA), which represents oil consumers, warned that a further cut in output would accelerate the global economic crisis.
“Another cut risks being a step too far” in view of the “catastrophic economic news over the past few months,” chief IEA analyst David Fyfe warned in comments to AFP.
OPEC’s recent production cutbacks, taking 4.2 million barrels out of the market every day, were likely to tighten the oil market, Fyfe said. And that “would risk a surge in prices: the last thing the economy needs at present.”
Oil producers do not agree, however. And in its latest monthly report, OPEC said that the worldwide recession was already leading to a slump in demand and that prices were therefore likely to continue to slide.
“With continued economic deterioration and demand erosion as well as the impending low demand season, there is likelihood of renewed pressure on prices,” the organization said yesterday.
“The world economy is in a dreadful situation with GDP (gross
domestic product) sliding into the red for the entire year of 2009.
Consequently, world oil demand is slipping steeply to a record low year-on-year.”
OPEC estimated that demand would contract by 1.01 million barrels per day (bpd) or 1.18 percent in 2009.
In its previous monthly bulletin released in February, OPEC had been penciling in a contraction of 0.58 million bpd for 2009.
“Oil prices need to remain at levels that support energy investment across the supply chain to help sustain longer term economic growth,” OPEC argued.
“These are the main issues under consideration when the OPEC conference meets on March 15,” the organization said.
OPEC president Jose Maria Botelho de Vasconcelos, who also represents member nation Angola, suggested this week that the organization could opt to cut output for the fourth time since September.