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OPEC keeps output steady to help heal sick economy
(Agencies)
Updated: 2009-03-16 08:25 VIENNA – OPEC ministers agreed on Sunday to leave existing output targets unchanged, but promised to enforce those curbs more strictly and said they would meet again at the end of May to review progress. The decision to resist additional cuts for now reflected concern for the economy and a belief supply curbs so far have begun to remove the excess from oil markets, the Organization of the Petroleum Exporting Countries said in a communique after its nearly five-hour conference.
Ministers from the 12-member producers' club had repeatedly said their focus was better compliance with deals in place since September to lower targets by 4.2 million barrels per day (bpd). OPEC adherence has been estimated at roughly 80 percent and full compliance would take away more than 800,000 bpd more. "It makes no sense to propose a cut if previous agreements have not been fulfilled," Venezuelan Minister of Energy and Petroleum Rafael Ramirez told reporters.
But ahead of Sunday's meeting only Algeria had clearly spoken out in favor of another cut, saying the oil market had factored in a reduction of at least 500,000 bpd and prices would fall without further supply restraints. For consumer nations, cheaper oil equates to a huge financial stimulus. Barack Obama, president of the world's biggest energy consumer the United States, called Saudi King Abdullah last week. The White House did not disclose the contents of the call, but analysts said the timing was significant. They predicted leading OPEC producer Saudi Arabia would not want to be seen to be destabilizing the economy ahead of a Group of 20 summit in London in April, to which the kingdom is invited to help seek solutions to the world's financial crisis. Asked about the new regime in the United States, OPEC's Secretary General Abdullah al-Badri said it marked an improvement in relations. "I don't want to say that I voted for Obama, but we can see a different tone ... that we didn't see in the past. We have seen a positive approach. They are ready for dialogue and we are ready for dialogue and ready for talk," he said. DONE ENOUGH? The International Energy Agency (IEA), which advises consumer countries, in a report on Friday said the OPEC supply curbs already in place were enough to drain fuel stocks in developed nations, even though it expected 2009 oil demand to fall by more than a million bpd compared with last year. |
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