OPEC to leave oil price targets alone

OPEC, the producer of more than a third of the world’s oil, has moved to abandon its price targets because its member countries can do nothing to drive prices lower than nearly $50 a barrel.

The Organisation of Petroleum Exporting Countries - the group that represents 11 mostly Middle Eastern countries - will continue to maintain its current quota of 27 million barrels a day, Iran’s oil minister said at a meeting in the Austrian capital Vienna yesterday.

Members will study a new price target, the minister said, because the current $22 to $28 a barrel goal is unrealistic.

“Clearly they are paving the way for a significant increase of oil price target,” said Kevin Norrish, an analyst at Barclays Capital. “This will be another strong year for oil as spare capacity is staying low.”

OPEC last month agreed to reduce output just as winter weather in the US and Europe boosted demand for heating oil, sending crude oil to $49.75 a barrel.

OPEC said that soaring prices have done very little to slow world growth, and members will consult amongst themselves before their next meeting - to take place in Iran in March - on when to lower supplies.

Kuwaiti oil minister and OPEC president Sheikh Ahmad Fahd al-Sabah said oil stocks were now enough to meet 52 days of demand, and an increase to 56 days of demand would raise concern of a surplus.

Oil producers fear expectations of a surplus would cause prices to tumble.

OPEC lowered output by 3% to 29.6 million a day earlier this month, according to estimates from Geneva-based consultant PetroLogistics Ltd, which tracks tanker movements. The total includes Iraq, which is excluded from the quota system.

The group expects to have 2.5 million barrels a day of spare production capacity by year’s end.

The London-based Centre for Global Energy Studies expects OPEC to target an average price of $40 a barrel for its benchmark oil index.

Saudi Arabia, OPEC’s largest oil producer and its most influential member, will seek to keep prices above $35 a barrel, the expert agency said.