Representatives from OPEC’s 12 member states have decided against further cuts in oil production and will instead concentrate on adhering to previously agreed reductions.
Meeting in Vienna, Austria, the Organisation acknowledged that the world was in the middle of the worst global recession in decades and voiced concerns over the effect the economic downturn was having on world oil demand. However, they admitted that compliance to previously agreed cuts in production was not yet at 100 per cent and therefore made the decision to stick to current levels. In February compliance to agreed cuts by OPEC members stood at 79 per cent.
Eng. José Maria Botelho de Vasconcelos, Minister of Petroleum of Angola and OPEC president told news gathering agency Reuters that the decision was not taken lightly.
“There has been a certain stability. The price of oil has been fluctuating between $40 and $50 per barrel and that is a sign that OPEC’s decision is being implemented,” he said.
“The current trend has not shown us a significant rise in prices and that is a sign that the market, due to the ongoing (economic) crisis, has yet to respond.”
“There are a series of factors that have stopped oil from reaching the expected levels like the financial and economic crisis, lack of demand for oil and an excess in stocks. These factors have a big influence on the price of oil,” he added.
OPEC also announced at the conference that it expects the G-20 countries to play their part in giving the world economy fresh stimulus when they meet in April. It also noted that while a necessary condition for economic recovery is a return of confidence in financial markets, and that
systemic risks to the financial system have already been reduced, the degree of success of bank bailout plans and fiscal stimulus packages may only become evident later in the year.
“As we have always maintained, the responsibility for ensuring stability in the oil market is a collective one involving all producers — OPEC and non-OPEC alike — as well as consumers. OPEC must not be expected to shoulder the burden alone,” de Vasconcelos said.
