OPEC Still Needs Support of Non-OPEC Countries
OPEC continues to need the support of non-OPEC countries to shore up world oil prices, and is not willing to restrict its output without similar restrictions from independent producers, according to a statement by Qatari oil minister Abdullah al-Attiyah.
"I don't believe OPEC will cut more alone. This is out of the question, we are not going to cut production if there is no agreement with non-OPEC producers," stated Attiyah. In December 2001 OPEC agreed to cut its crude output by a combined 1.5 million barrels per day starting January 1st after obtaining commitments from non-OPEC producers to cut close to 475,000 barrels per day. OPEC wants non-OPEC producers to match its commitment to keep the cuts in place for six months, but Russia has so far only announced a three-month cut.
OPEC ministers are scheduled to meet again to review the oil market on March 15th, but Attiyah said it was too early to predict the outcome of the meeting. "We'll wait and see in March who is adhering and who isn't adhering to the agreement," he said. He urged all producers taking part in the agreement to cut output to respect their commitments, warning prices could fall further if the deal did not hold. "If there is no adherence to the agreement, then for sure the market will collapse. We have to save this market," he said. "Alone we can't do it. We did it, but as we reached the minimum level we need help from others. Even in the December agreement, they gave one barrel, we gave three barrels.
The Qatari minister said that OPEC might suspend its supply cuts in March if any producer glutted the market with crude or refined products. Attiyah said he was not satisfied with current oil prices. "We have to be pragmatic. $25-28/bbl was at a time when the economy was going well and oil demand was high. After September 11, a lot of things changed and we have to be more pragmatic. That's why we see $22/bbl or $23/bbl as reasonable," he said. "The band is still there but we are giving it some days off, some holiday," he said, referring to OPEC's target band of $22-28/bbl for its crude basket price. The basket price has been outside the range since September last year, and has not been above $20/bbl since early October.