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OPEC to hold output
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September 26, 2001: 12:44 p.m. ET
Cartel calls current production sufficient; prices slide near 2-year low
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LONDON (CNNfn) - After cutting production three times this year, the Organization of Petroleum Exporting Countries agreed Wednesday to hold output steady, a group representative said, as industrial countries around the world struggle to prop up their ailing economies.
At OPEC's meeting in Vienna, Austria, Libyan representative Ahmed Abdulkarim said current output of 23.2 million barrels per day is adequate and the cartel will hold a formal vote Thursday to ratify the decision.
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 CNNfn's Charles Hodson reports from Vienna, Austria, on OPEC meeting. |
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"We've agreed to monitor the situation and change production only if necessary," Abdulkarim said.
The United States and Japan already are struggling with the threat of recession and growth has slowed across most of Europe. Analysts say the Sept. 11 attacks on New York and the Pentagon near Washington are almost certain to hurt the U.S. and other economies in coming months and cuts might boost oil prices, thus hampering a global economic recovery.
OPEC's decision to stand pat comes as oil prices continue falling to near 2-year lows after reaching a high of about $31 a barrel before Sept. 11. Brent crude fell 91 cents to $21.57 in London while light crude for November delivery fell 71 cents to $21.10 in New York.
"OPEC has been quietly asked to ease pressure on the world economy," Mark Tinker, analyst at Commerzbank, told CNN.
Analysts said OPEC may have been successful in keeping oil within its target price range of $22 to $28, but as economies cool, that is no longer sustainable. The cartel supplies about 40 percent of the world's crude oil.
"The question is whether OPEC allows prices to slip to a slightly lower range without formally abandoning its basket price," said Mehdi Varzi, an oil analyst at Dresdner Kleinwort Wasserstein.
Kuwait's al-Subaih has said OPEC would be comfortable with prices at the lower end of its targeted $22 to $28 price band.
Meanwhile, Saudi Arabian oil minister Ali al-Naimi said the cuts from earlier in the year need time to take effect.
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"The September cut still needs time to work. There are still barrels out there," he said, referring to cuts that were agreed to last summer and implemented earlier this month. "Let's let the cut work first, then we can take further measures as needed." Saudi Arabia is the world's largest producer and the biggest oil exporter in OPEC.
"We must hold steady and watch this for a while. We gained credibility last year and we want to keep that credibility. We should not react every time the price yo-yos," Naimi continued.
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A hike in crude prices could add to woes in the airline industry, which has cut more than 100,000 jobs as travel slowed after terrorists crashed passenger jets into the World Trade Center and the Pentagon, killing thousands of people, on Sept. 11.
The cartel has made clear it is willing to pump a little more crude to boost inventories in case of an extended war, but as the world's economies slow there are only two unlikely occurrences that could lift oil prices once again: a long, cold winter in the United States and a rapid economic recovery.
OPEC's ministers are to meet again in November. 
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