VIENNA, Austria (AP) — OPEC has all but ruled out pumping more oil to ease record-high prices, key oil ministers signaled Tuesday on the eve of a key meeting.
Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said the 13-nation cartel is shying away from boosting production because of the U.S. economic slowdown, political turmoil in the Middle East and expectations of slackening global demand for crude.
On Monday, oil surpassed the all-time record of $103.76 a barrel when adjusted for inflation. The previous record was $38, set in 1980 at the height of the U.S.-Iran hostage crisis. Oil held steady well above $102 in Asia trading Tuesday.
“Because of the economic slowdown in the United States — which is affecting world economic growth and world demand on oil this year — I don’t think OPEC will consider increasing its production,” Khelil told reporters. “Stocks are very high … and we are going to have less demand in the second part of the year.”
Pressure has mounted on OPEC to raise output, which would put more crude on the market and help pull down prices which have been holding above $100 for weeks.
But the group contends that there is an ample supply of crude, and since demand typically eases in the second quarter, it was widely expected to take no action at Wednesday’s meeting in Vienna.
Kuwait and Libya are among OPEC members who have said the cartel should maintain its current output, estimated at about 31.5 million barrels a day — roughly 40 percent of daily world demand.
However, Iran and Venezuela — both hawkish on prices — have pressed for a cut in output. Analysts said it was doubtful that the rest of OPEC would go along with that, since it would push prices even higher in the short-term.
“A cut would have to be a consensus,” said Rafel Ramirez, Venezuela’s oil minister, contending any increase “would make no sense.”
“Global markets are well supplied,” Iranian Oil Minister Gholam Hussein Nozari said Tuesday, saying the weak U.S. dollar was a greater concern.
Ramirez said he saw $90 a barrel as the long-term floor for oil prices, suggesting that OPEC was determined to ensure prices don’t fall below that level.
Yet the pricing trend has been up, not down.
Oil shot up a dramatic 19 percent in February. Among the factors behind that: tensions in the oil-rich Middle East, Turkey’s incursion into northern Iraq and the slumping dollar, which has prompted speculators and other investors to shift cash to crude and other commodities.
Reducing output now “would remove a bullet from their arsenal which could be used more effectively at a latter stage if prices begin to fall,” said Johannes Benigni, managing director of JBC Energy in Vienna.
The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Iraq is the only member not subject to the cartel’s output quotas.