Oil price danger looms over OPEC meeting
OPEC oil ministers arrived in Vienna on Monday under pressure to help combat high crude prices that have surged to near-record highs and loom as a new risk for the global economy.
By Agencies |
VIENNA: OPEC oil ministers arrived in Vienna on Monday under pressure to help combat high crude prices that have surged to near-record highs and loom as a new risk for the global economy. The outcome is uncertain to a formal meeting Tuesday, when the group will decide whether to raise output amid speculation that Saudi Arabia is preparing to persuade its reluctant partners of the need for an increase.
High oil prices, which are within striking distance of $80 a barrel, have become an added burden for the world economy in addition to financial market turbulence and a crisis in the US "subprime" housing market. OPEC producers find themselves under pressure from consumer countries to bring down prices, but they are aware that the outlook for oil demand is clouded given the question marks over global economic growth.
Qatari Oil Minister Abdullah bin Hamad al-Attiyah summed up the dilemma for the 12-member group as he arrived on Sunday, saying that an increase in supply risked coinciding with a fall in demand because of weakness in the United States. "What if I increase oil (production), and nobody will buy it?" said al-Attiyah, who is in favour of keeping output unchanged. The Organisation of Petroleum Exporting Countries produces about a third of world crude supplies.
Al-Attiyah's remarks reflect anxiety in OPEC that the oil exporters' group could bow to pressure to increase production only to find demand falling as a result of slowing economic growth, particularly in the United States. In 1997, OPEC increased output as the Asian financial crisis was developing and crude prices crashed to $10 in 1999 because of falling demand and fears of a global recession.
"We don't want the world economy dragged (by oil prices)," said al-Attiyah. "We know if the US catches a cold then we will start coughing." Oil prices fell slightly on Monday in Asian trading, but remained close to their record level of 78.77 dollars per barrel. New York's main contract, light sweet crude for October delivery, was down 26 cents to $76.44 a barrel, while Brent North Sea crude for October delivery was off 32 cents at $74.75.
Qatar, Iran, Kuwait, United Arab Emirates and Libya have all spoken in favour of keeping output unchanged, but kingpin Saudi Arabia was said Sunday to be in favour of an increase. The Washington-based oil consultancy PFC Energy, citing oil ministry sources, said that Saudi Arabia, the most influential OPEC member, would make the case for a production hike to help ease the burden of high prices.
"PFC Energy understands that Saudi sources have been signalling that OPEC needs to consider a production increase of 500,000 barrels per day to 1.0 million bpd," said analyst David Kirsch.
High oil prices, which are within striking distance of $80 a barrel, have become an added burden for the world economy in addition to financial market turbulence and a crisis in the US "subprime" housing market. OPEC producers find themselves under pressure from consumer countries to bring down prices, but they are aware that the outlook for oil demand is clouded given the question marks over global economic growth.
Qatari Oil Minister Abdullah bin Hamad al-Attiyah summed up the dilemma for the 12-member group as he arrived on Sunday, saying that an increase in supply risked coinciding with a fall in demand because of weakness in the United States. "What if I increase oil (production), and nobody will buy it?" said al-Attiyah, who is in favour of keeping output unchanged. The Organisation of Petroleum Exporting Countries produces about a third of world crude supplies.
Al-Attiyah's remarks reflect anxiety in OPEC that the oil exporters' group could bow to pressure to increase production only to find demand falling as a result of slowing economic growth, particularly in the United States. In 1997, OPEC increased output as the Asian financial crisis was developing and crude prices crashed to $10 in 1999 because of falling demand and fears of a global recession.
"We don't want the world economy dragged (by oil prices)," said al-Attiyah. "We know if the US catches a cold then we will start coughing." Oil prices fell slightly on Monday in Asian trading, but remained close to their record level of 78.77 dollars per barrel. New York's main contract, light sweet crude for October delivery, was down 26 cents to $76.44 a barrel, while Brent North Sea crude for October delivery was off 32 cents at $74.75.
Qatar, Iran, Kuwait, United Arab Emirates and Libya have all spoken in favour of keeping output unchanged, but kingpin Saudi Arabia was said Sunday to be in favour of an increase. The Washington-based oil consultancy PFC Energy, citing oil ministry sources, said that Saudi Arabia, the most influential OPEC member, would make the case for a production hike to help ease the burden of high prices.
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"PFC Energy understands that Saudi sources have been signalling that OPEC needs to consider a production increase of 500,000 barrels per day to 1.0 million bpd," said analyst David Kirsch.
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