Long-term view: Saudi Oil Minister Ali Naimi in Vienna today
Opec keeps taps open
Opec will keep its oil output near a 25-year high despite a 16% drop in the crude price since mid-July, ministers said today.
However, the group left the door open to a supply cut before the end of the year.
Ministers saw no reason to tamper with the 28 million barrels per day ceiling just yet, with peak winter demand closing in and supply worries ever present.
But some were deeply concerned at the pace of oil's decline in recent weeks. Opec authorised its president, Nigeria's oil minister Edmund Daukoru, to call for an extraordinary meeting before the next scheduled gathering in December if needed.
"There is no need to cut now but if there is a deterioration in the global economy and prices fall quickly, then we will need a meeting before December," Algerian Energy and Mining Minister Chakib Khelil told Reuters after today's talks.
Opec last cut production in April 2004.
For a year, Opec has been pumping close to its fastest rate for 25 years to guard against price shocks and ease pressure on consumer economies. Prices have sunk from a record $78.40 a barrel on 14 July to a five-month low below $66 today.
The group, supplier of a third of the world's oil, has been at pains to avoid naming a price it would defend.
But Iranian Oil Minister Kazem Vaziri-Hamaneh said today he wanted to see Opec's basket of crudes holding above $60 a barrel, which would equate to US crude above $64.
Opec said it would "respond rapidly to any developments which might jeopardize their interests."
Saudi Oil Minister Ali Naimi, Opec's most influential voice, took the recent price fall in his stride.
"Market fundamentals are very sound," he told reporters.
"We are beginning to see a slight decrease in economic growth, very slight ... It is nothing alarming."
Ministers saw no need for an immediate production cut - oil is still up $4 this year and three times the price at the start of 2002, the beginning of a four and a half year rally.
Opec is mindful that the Atlantic hurricane season still has several weeks to run and US Gulf of Mexico oil output has yet to recover fully from last year's storms.
Iran's disagreement with the United Nations Security Council over its uranium enrichment programme also has the potential to drive prices higher. The US favours sanctions against the world's fourth-biggest oil exporter.
A quarter of Nigeria's oil output lies idle because of militant attacks and Iraq's exports are vulnerable to sabotage.
"This business is very tricky. When prices come down investors start thinking, should we build additional capacity? This business is a long-term investment business so don't think these blips are significant. Look at it long term," Naimi said.
Surging oil prices boosted the value of Opec's crude exports by 45% to a record $513 billion last year.
But there are signs that economic activity is easing in top consumer the US and the second-biggest consumer China has raised lending rates to try to cool its economy.
Opec's economists are forecasting demand for its oil will drop 800,000 bpd to an average 28.3 million bpd in 2007 as new non-Opec production comes onstream.
"Growth in crude oil supply in recent years has continued to exceed growth in demand - the rebound in non-Opec supply in 2007 is predicted to be at its highest level since 1984 - and market fundamentals indicate a clear imbalance between supply and demand," Opec said in its communique.
The latest US car sales data show increasing numbers of US drivers are trading in their sports utility vehicles for smaller, more fuel efficient cars.
Carl Calabro of PFC Energy in Washington said the real test for the organisation may come early next year.
"The concern is what happens to the price in spring when demand falls. World inventories are quite adequate at the present time," he said.