MercoPress. South Atlantic News Agency

OPEC decision soothes world oil markets

Oil markets stabilized following the Organization of Petroleum Exporting Countries decision to leave production at a near a two-decade high. Meeting in Vienna OPEC agreed to keep quotas at 28 million barrels a day, Saudi Arabian Oil Minister Ali al-Naimi told reporters.

The 11-member group will meet again June 1 to review the accord. Meanwhile U.S. crude-oil inventories jumped 6.8 million barrels last week leaving supplies at its highest since May 1999, the Energy Department reported.

"Right now the goal of the Saudis, Kuwaitis and the other members of the Gulf Cooperation Council is to see prices fall'' said Antonio Szabo, chief executive of Houston consultant Stone Bond Technologies. ''They are very sensitive to the position of the U.S. and the rest of the industrial world. The moderate states want to see prices between 50 and 55 US dollars a barrel.''

"We're not going to overreact to this extraordinary period'' of high prices, said Rex Tillerson, chairman of Exxon Mobil Corp., the world's largest oil company, in an interview published this week.

"This is an industry that lives in cycles. The price environment we're in today is not sustainable''.

OPEC President Edmund Daukoru said violence in Nigeria has cut production in the country by 556,000 barrels a day, easing pressure on the group to reduce output. Daukoru is also Nigeria's oil minister.

"With oil prices at 60 US dollars a barrel it was a foregone conclusion they were not going to cut'' said Craig Pennington, head energy analyst at Schroders Investment Management Ltd. in London.

"If you do see disruption from Nigeria, if you do see disruption from Iran, the oil price will go substantially higher from here. So OPEC is reluctant to start turning the taps off just now''.

"Oil flow is continuing, and the exports will not be stopped'' said Iranian minister Vaziri-Hamaneh. ''So far, there is no reason to change our position. We have no intention to reduce our exports''.

Concern that Iran would retaliate to possible UN sanctions over its nuclear program by cutting off exports sent crude prices to almost 70 US dollars the barrel last January 23.