OPEC Braces for Slump in Energy Demand
CARACAS, Feb 21 (IPS) - The decline in demand for petroleum in this year's second
quarter, calculated at two million barrels of crude daily, could force the Organisation of
Petroleum Exporting Countries (OPEC) to implement further cuts in output in order to prop
up prices, said Alí Rodríguez, the cartel's secretary general, Wednesday.
The energy ministers of OPEC member countries are to meet March 17 in Vienna to assess the effects on
world markets of a 1.5 million barrel-per-day cut in output that took effect on Feb 1.
Rodríguez, a Venezuelan, told the media here that within the cartel exists the ''conviction that it will be
necessary to cut production, given that, generally, in the second quarter of the year there is a notable drop in
demand and, of course, a decline in prices.''
Venezuela's President Hugo Chávez, meanwhile, stated in Qatar that OPEC seeks a ''fair price'' for petroleum
in the international markets.
Chávez concluded an official four-day tour Wednesday of Saudi Arabia and Qatar, which are OPEC
members alongside Algeria, Indonesia, Iraq, Iran, Kuwait, Libya, Nigeria, United Arab Emirates and
Venezuela.
''Though one does not live on petroleum alone, we will use our unity to defend a fair price, because it is vital
for allowing the governments of OPEC countries to meet the needs of our people,'' Chávez stated Tuesday in
Doha, capital of Qatar.
''Demand could fall by two million barrels a day,'' according to Rodríguez, who nevertheless ruled out the
possibility that the new cuts in output would reach that level, given the 1.5 million barrel reduction implemented
earlier this month.
Benchmark crude prices suffered a fall during the week ending Feb 16. The OPEC basket of seven crudes
declined 1.04 dollars to close at 25.95 dollars a barrel.
The organisation is staking its bets on a price band of 22 to 28 dollars a barrel to create a stable and
predictable market that ''benefits consumers and producers alike.'' The petroleum producing nations consider
this price range to be appropriate and fair.
For its part, North Sea Brent hit a decline Feb 12 to 16, falling 1.78 dollars to 27.83 dollars a barrel, while
US-produced crude registered 29.95 dollars, a 98-cent decrease in the price of the 159-litre barrel.
International oil prices saw a difficult month last December when they shrank by some 25 percent.
The decline came at a time when prices traditionally rise due to the arrival of winter in the industrialised
countries of the Northern Hemisphere, which are the world's leading energy consumers.
Added to the complexities of the oil price situation is the fact that analysts hold conflicting opinions on the
market effects of the US and British bombings of Iraq.
In the opinion of the OPEC secretary general, ''speculative movement'' could occur, potentially triggering a
price hike. But Rodríguez emphasised that the market has already absorbed the impact of the Iraqi conflict,
due to the fact that it has been ongoing.
With the cut in oil output in effect since Feb 1, the OPEC places 25.2 million barrels on the world market daily
- 35 percent of the total crude traded.
The volume excludes Iraq's output because that country has been subject to a UN-imposed embargo since the
1990 invasion of Kuwait and the 1991 Gulf War. (END/IPS/tra-so/ac/dm/ld/00) |
