OPEC delivers warning on oil prices

OPEC warned today that oil prices, already hovering near US 50 a barrel, would remain high through the spring, even as the cartel decided to keep its production ceiling at 27 million barrels a day.

The decision, reached at a meeting of the 11-nation group in Vienna, offers little solace for consumers worried about high fuel prices.

Kuwait’s oil minister Sheikh Ahmad Fahd al-Ahmad al-Sabah, who leads the group, said he was given permission to conduct a meeting via telephone before the next meeting in March to address the production issue if market conditions warrant.

The Organisation of Petroleum Exporting Countries also decided to temporarily suspend its price band of US 22 to US 28 a barrel, which was set in March 2000 and has largely been ignored since 2004.

Iranian Oil Minister Bijan Namdar Zangeneh said the price needs to be changed, but added the cartel didn’t have a specific target for its reference basket of seven crudes. On Friday, its basket price stood at US 41.88.

Indonesian Oil Minister Purnomo Yusgiantoro said the rate, adjusted for inflation and the declining dollar, would be around US 32 to US 35 a barrel.

Most OPEC oil ministers have said there’s no need to modify output, despite the high prices – a feeling that could cause more consumer concern.

OPEC, which accounts for one-third of the world’s oil supply, is seeking to keep its buyers – and their consumers – from becoming jittery that prices could resume their climb. Prices hit a record US 55.17 per barrel in late October.

Qatari oil minister Abdullah bin Hamad al-Attiyah said OPEC would probably have a surplus of 1.5 million barrels a day during the second quarter.

On Friday, light, sweet crude for March delivery dropped US 1.66 to 47.18 a barrel on the New York Mercantile Exchange. In London, Brent for March delivery fell US 1.49 to US 44.95 on the International Petroleum Exchange.