QUITO, Ecuador — OPEC announced Saturday that it will not change oil output, amid prices just below $90 per barrel and global economic uncertainty.
The decision of the 12-member cartel was announced by outgoing OPEC President and Ecuadorean Oil Minister Wilson Pastor.
There was much discussion before the meeting about whether oil would soon broach the psychological price barrier of $100.
Oil minister Ali Naimi of Saudi Arabia, OPEC’s biggest producer, told reporters prior to the closed-door meeting that he sees no need to increase production.
“The market is in balance and is stable,” he said. “The fundamentals are good.” He said he was comfortable with a price range of $70 to $80 a barrel.
Venezuela’s minister, Rafael Ramirez, said he thought oil was headed for $100 a barrel, a price he said his country considers “proper.”
The “no-change” announcement was widely anticipated by experts, who expected little from the meeting. Four of the cartel’s ministers — from Iraq, Kuwait, Qatar and Nigeria — did not even make the trip, sending lower-level delegates to this Andean capital.
OPEC, which is responsible for 35 per cent of global oil production, has not changed its output quotas since late 2008. Last month, Naimi said oil from $70 to $90 per barrel was tolerable for consumers.
The 50-year-old cartel has had a good year, with prices hovering in the mid-$80 range and profits up 32 per cent over 2009 to $750 billion, according to U.S. Energy Department estimates. OPEC does not release profit numbers.
Oil reached a two-year high of nearly $91 on Tuesday — as traders gauged the dimensions of 2011 demand and responded to a particularly harsh onset of winter in Europe.
The Paris-based International Energy Agency, or IEA, said Friday that stronger-than-anticipated consumption next year in North America and emerging Asian economies led by China could compel OPEC to boost supply “if prices continue their relentless rise.”
Issuing its global oil demand forecast, the IEA said it anticipated a rise in demand next year to 88.8 million barrels a day, 260,000 daily barrels more than previously forecast.
OPEC’s monthly market report, released Friday, forecast a boost in demand of 1.2 million barrels per day in 2011 over this year’s levels to an average of 87.1 million.
IEA said it expected “quick agreement” from the OPEC ministers to maintain current output targets.
While ministers expect demand for crude to continue to grow, “At this moment, demand is not good,” Iran’s oil minister, Masoud Mir-Kazem, told reporters as Saturday’s closed-door meeting was about to begin.
Analyst David Kirsch of PFC Energy in Washington agreed, citing current healthy inventories and continuing global economic uncertainty.
“If demand does turns out to be stronger than they’ve expected, there is still a safety cushion out there and they can come back later and increase production,” he told The Associated Press. “Or more likely, what happens is that individual members cheat.”
Oil supplies in major industrialized nations and China are currently well above normal, and while OPEC forecast a demand boost in North America and China in the monthly market report it published Friday it believes western Europe’s festering debt crisis will dampen consumption there.
OPEC last changed output in late 2008 when it capped a record series of cuts to help boost prices that had plummeted with the global financial meltdown.
Some analysts believe conditions are now conspiring against much more upward pressure on prices as the effects wear off from the U.S. Federal Reserve Bank’s decision to issue and buy up to $2.3 trillion in U.S. Treasury bonds. The post-meltdown move — essentially printing money — made U.S. exports cheaper abroad and boosted the price of oil. It also encouraged the Chinese to buy and store more oil.
Many analysts believes $100 a barrel for oil is inevitable in 2011 though it could well take months.
“Everyone is worked up about $100 a barrel,” said Barbara Shook, a Houston-based analyst with the Energy Intelligence Group. It’s a psychological number. A hundred-dollar oil means that you’ve got $3 gasoline at every market in the U.S.
“And that’s another tipping point. It could drop consumption, decrease discretionary driving, things like that,” she added.
Ecuador, which rejoined OPEC in 2007 after 15-year absence, holds the rotating presidency this year. Iran will take over for 2011.