OPEC taking no action to stem oil price plunge

OPEC producers prepared today to leave oil supplies unchanged at the expense of their own budgets, rather than take any blame…

OPEC producers prepared today to leave oil supplies unchanged at the expense of their own budgets, rather than take any blame for contributing to the world's slide into recession.

Influential Saudi Oil Minister Mr Ali al-Naimi said the cartel's best option was to allow time for existing output curbs to be felt in a world oil market where crude prices have slumped under the threat of an impending economic downturn.

Ministers are resigned to leaving production quotas unchanged at 23.2 million barrels a day, despite a 25 per cent fall in oil prices since September 11th.

But demand is waning for OPEC's oil as industry, business and consumers cut back on consumption of jet fuel, gasoline and diesel and oil traders appear to have lost confidence in the cartel's ability to prop up prices.

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"It's a no win situation for OPEC," said consultant Mr Yasser Elguindi of Medley Global Advisors. "If they cut they stand to lose a lot politically while gaining very little."

London benchmark Brent in early afternoon trade on Wednesday fell another 33 cents a barrel to $22.05, taking losses in the two weeks since the attacks to more than $7 a barrel.

Saudi Arabia's Mr Naimi said the aim was still to target $25 crude but OPEC's reference basket of crudes now is valued at just $19.87, its lowest for 18 months.

OPEC already has cut output three times this year, the latest reduction of a million barrels a day coming into effect at the beginning of September.

Ministers are worried that without an uptick in world demand, further curbs could erode OPEC market share versus its non-OPEC competition without necessarily helping prices.