Opec ignores Venezuela, to keep status quo on output

CARACAS: Opec on Thursday prepared to leave oil supply quotas unchanged and keep pumping at full capacity, rejecting a push for a production cut by host Venezuela, the cartel’s leading price hawk.

The Organisation of Petroleum Exporting Countries worries that $70-a-barrel crude could backfire on it by slowing global economic growth and fuelling investment in alternative energy. “At this price, it is not possible for Opec to propose a cut,” Qatari Oil Minister Abdullah al-Attiyah said.

Oil fell below $71 a barrel on Thursday after the US said it was willing to join European countries in talks with Iran.
US crude fell $1.0 to $70.3 a barrel. London Brent crude was down 55 cents at $69.9 after slipping 64 cents a day ago.

Oil prices fell on Wednesday after Washington, which severed ties with Tehran in 1980, said it would join talks with Iran if the country halted nuclear enrichment — a condition to which the world’s fourth-biggest oil exporter looked unlikely to agree.

Price hawk Venezuela says that despite near-record crude prices, Opec is pumping too much and should consider reducing output to prevent a price slump.

For more than a year, Opec has had little leverage over crude prices. Refinery bottlenecks, Iran’s stand-off with the West over its nuclear program, supply disruptions in Iraq and Nigeria and a rush by investors into commodities have all fuelled the price of crude. Venezuelan President Hugo Chavez, leading a push by Latin American energy producers to claim a greater share of profits from foreign investors, will address the meeting.

“This is Venezuela’s show, its not Opec’s’ said Roger Diwan of Washington’s Petroleum Finance Corporation. Having renegotiated oil contracts with foreign companies to increase government control and raise taxes Chavez is now supporting moves by Andean governments to nationalise energy resources.

On Thursday his energy minister Rafael Ramirez said Caracas was considering switching some oil sales to euros from dollars.

While Venezuela sells most of its crude to the US it is planning to double sales to China and also exports some crude to Europe through a location swap with Russia.