OPEC Won't Raise Output, Cites US 'Mismanagement'
OPEC said it decided not to put more oil on the global market despite near record-high prices for crude, blaming the U.S. for economic "mismanagement" it said was having a worldwide effect.
The 13-nation Organization of Petroleum Exporting Countries said it opted to pump neither more nor less oil right now because crude supplies are plentiful and demand is expected to weaken in the second quarter.
OPEC President Chakib Khelil told reporters the global market is being affected by what he calls "the mismanagement of the U.S. economy," and that America's problems were a key factor in the cartel's decision to hold off on any action.
"If the prices are high, definitely they are not due to a lack of crude. They are due to what's happening in the U.S.," Khelil said. "There is sufficient supply. There's plenty of oil there."
OPEC did pledge to maintain "constant vigilance" over the market.
Oil hit an all-time, inflation-adjusted record of nearly $104 a barrel earlier this week, and it's been hovering around $100 a barrel for weeks. It was above $102 a barrel Wednesday.
Khelil said he and OPEC's secretary-general were authorized to call an extraordinary meeting or hold phone consultations "at any time, depending on the pressures on the market" -- a statement seen as a gesture aimed at easing jitters in global markets.
There had been some speculation that OPEC might actually cut production -- a move that would drive prices even higher, along with profits for cartel members -- but Khelil said a cut was not discussed at Wednesday's meeting. Earlier in the week, price hawks Venezuela and Iran had indicated they planned to push for a cut.
On Tuesday, OPEC got a rebuke by U.S. President George W. Bush.
"Understand the consequences of high energy prices," Bush said after meeting with King Abdullah II of Jordan at the White House.
"I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices," he added.
Khelil said crude stocks were well within their five-year average and the 13-nation group was not inclined to either boost or reduce its current output of about 32 million barrels a day. OPEC satisifes roughly 40 percent of the world's demand for crude.
Analysts had not expected any significant action Wednesday.
"In truth, OPEC's decision not to pump more oil is a reflection that supply is relatively good," said Anthony Sabino, a professor of business at St. John's University in New York.
"What is driving oil prices up to the stratospheric level of over $100 per barrel is the U.S. economy, now undeniably in recession," he said. "It's not so much the price of oil is going up -- it's that the value of the U.S. dollar, sad to say, is slumping."
Oil shot up a dramatic 19 percent last month as the falling dollar prompted speculators and other investors to shift cash to crude and other commodities as a hedge.
Among other reasons for the spike: tensions in the oil-rich Middle East and Turkey's incursion into northern Iraq.
Key cartel members said this week that prices in the $85-$90 per barrel range -- not over $100 -- would be optimal.
The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Iraq is the only member not subject to the cartel's output quotas.