OPEC Mutual Mistrust Grows In Tandem With Oil-Price Rout
Cairo. Faced with plunging oil prices and shrinking revenues, members of the Organization of Petroleum Exporting Countries suggested on Saturday that they might lower production for the third time this year when they meet in Algeria next month.
But the group’s unwillingness to seek an immediate cut in output, even as demand craters in the United States and the world edges into a broad recession, reflects the difficulties the cartel is facing in trying to stop prices from falling.
At a chaotic news briefing in a hotel lobby here, OPEC’s president, Chakib Khelil, stressed that members’ compliance with previous production cuts had been satisfactory. But even as the organization tries to present a unified front, it is facing the tough task of halting prices from falling at a time when demand has stopped growing.
After six years of rising prices and little tension within the group, members are growing distrustful of one another’s pledges to trim production. As a result, OPEC has proved ineffective at slowing the slide in prices, let alone reversing it.
After reaching an historic high in July, oil has lost $90 a barrel, to about $55, as economic growth suddenly slowed and the financial system seized up.
At their last two meetings in recent months, OPEC members pledged to withdraw two million barrels a day from the market. It is inevitable that OPEC will have to reduce its production more in coming months, analysts said.
Saudi Arabia’s oil minister, Ali al-Naimi, said the group would “do what needs to be done’’ to shore up prices.
He also said $75 a barrel was a “fair price,” echoing comments made by King Abdullah of Saudi Arabia in an interview with Al-Seyassah, a Kuwaiti newspaper, that was published the same day. It is the first time in years that Saudi officials have talked about a specific price.
Oil prices gained 9 percent last week, after rebounding from three-year lows, as markets anticipated that OPEC would cut its production on Saturday. They were unchanged in thin trading on Friday in New York at $54.43 a barrel but could slip back below $50 again next week.
OPEC does not publish production figures from its members, so countries have to rely on so-called secondary sources, which include estimates by oil consultants and monthly figures published by the International Energy Agency.
Some producers believe that Iran and Venezuela, which have been the most vocal in calling for new production cuts to shore up prices, are not carrying enough of the burden. Others, like Angola, see little advantage in reducing their own output while they seek to attract new investors.
The New York Times