OPEC pressured in face of $100 oil

The oil producing cartel OPEC will face enormous pressure to help calm the febrile crude market at its next meeting in February after prices struck the symbolic $100 level, analysts said. “It (the 100-dollar record) will be a psychological trigger for consumer countries,” said global head of commodities at investment bank Societe Generale Frederic Lasserre. “We will see governments putting pressure on OPEC, saying ‘we need you to do something for us’. In the end though, they (governments) probably share th
e view that adding a few barrels will not change the market.


The 13-member Organisation of Petroleum Exporting Countries shrugged off demands at its last meeting in December, despite a public plea from US Energy Secretary Samuel Bodman for an output increase. The Saudi-led cartel pumps about 40 percent of world oil supplies but restricts the output of its members through a quota system that is reviewed at regular meetings. London-based analyst John Hall, who runs his own oil consultancy, John Hall Associates, sees OPEC bowing to pressure and making a gesture at the
extraordinary meeting in Vienna on February 1.

I was convinced that they were going to increase output in December. I’m confident they are going to do it this coming month,” he said. “Maybe they can talk the thing up though (the possibility of an increase) and the market will come down. Then they won’t need to do it,” he said. OPEC, which declined to make anyone available for interview when contacted by AFP, insists that prices are being driven by speculative buying and that increasing supplies would not have an impact on the market.

For now the cartel’s view is that underlying supply and demand conditions are nowhere near as tight as record oil prices would suggest,” said Julian Jessop, chief international economist at research group Capital Economics. “But if oil prices are still around 100 dollars per barrel in the run-up to the next OPEC meeting on February 1, we would expect quotas to be raised again.

Kuwait Times