OPEC oil chiefs were wrapping up a meeting Monday with stern warnings that soaring oil prices could slump dramatically next year, forcing them to cut output.
Ignoring calls for a production increase to soothe a feverish oil market, the Organisation of Petroleum Exporting Countries (OPEC) decided instead that the market had more than enough oil.
They said they would meet again in January to discuss turning down the taps instead. OPEC also resolved a long-running dispute over a new secretary general to head up the Vienna-based grouping of 11 oil exporters, picking current president Ali Rodriguez of Venezuela to take over from January.
"I have no doubt that prices will fall in the second quarter" of 2001, Rodriguez told reporters here late on Sunday, summing up concerns expressed by ministers from Iran to Kuwait, Algeria to Qatar.
The meeting was due to wind up Monday morning, after being extended by an extra day as OPEC ministers observed Austria's day of mourning on Sunday for the victims of the Alpine funicular railcar blaze.
While Austria mourned on Sunday, OPEC ministers huddled in a Viennese hotel comparing notes about the volatile oil market. Prices tripled between early 1999 and the middle of this year, skyrocketing to 10-year high points amid fears of a supply shortfall.
Oil consuming nations have warned OPEC that the situation could spark a global economic slowdown, and the organisation has four times this year grudgingly agreed to open the oil taps a little further.
But ministers indicated in Vienna this weekend that the cycle of oil increases was over, despite the fact that prices remain well above 30 dollars a barrel. They argue that forecasts show supply is already starting to outstrip demand, and warn that the market could be swamped by next June.
"There is currently excess supply of 1.4 million barrels," said Rodriguez. "I don't think there is an oil crisis right now." Ministers ignored the calls for more oil now to tide the market over through the northern hemisphere winter, all but ruling out allowing their own price-band mechanism triggering another hike of 500,000 barrels a day increase at the end of November.
"There is no mechanism in the world that replaces good judgment," said Saudi Arabian Oil Minister Ali Naimi. "You watch over the parameters and see if they have met your objective."
The mechanism triggers an output increase if prices remain over 28 dollars a barrel for 20 working days or a production cut if they persist below 22 dollars for 10 consecutive working days.
Several OPEC ministers even argued against waiting too long before a cut, fearing a downward spiral in prices that could replicate the 1998 slump which proved so damaging to their economies.--AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)