MercoPress. South Atlantic News Agency

“OPEC should not lower output”, with current oil prices

The Organization of Petroleum Exporting Countries (OPEC) should not interfere with production quotas at its meeting on March 5 if prices remain at their current levels, said Rilwanu Lukman, oil adviser to the President of Nigeria. Oil prices this week hovered in the range of 100 US dollars a barrel.

"If prices do not fall, I do not think they are lowering their production now" said Lukman, whose country is one OPEC's 13 members. "If prices remain between 90 and 100 dollars, I think it is unlikely they will act", he added. Lukman said that the fundamentals of the oil market are currently "good" and "there is a delicate balance between supply and demand", although high levels of US stocks for several weeks is a source of concern, particularly when it occurs after the winter period, which is traditionally one of high consumption and falling stock piles. OPEC current president, Algeria's Chakib Khelil suggested recently that the cartel would choose between maintaining production and cutting quotas at next week's meeting. OPEC is concerned about the expected economic slowdown, especially in the US, which could lead to surplus oil supplies and a fall in prices. Speaking in Abuja, Nigeria, Chakib Khelil said that since US stocks were high and the level of gasoline and other products were high, there was no need to increase production. "In addition, there's concern about the second quarter of this year, which normally experiences a decrease in demand. Plus all the issues related to the deteriorating situation of the US economy and its impact on world economic growth, which would be linked to an overall demand decrease". Given this scenario "why would you need to increase production?" asked Khelil. He argued it would not be wise to increase production just as it would have been suicidal to lower production because of economic growth deterioration. "We would be pointed to as the escape-goat for what's happening in the world" he said. Khelil insisted that current oil price increases can't be attributed to supply problems but rather to speculators' activities and global geo-political issues. From the White House the President Bush administration suggested that OPEC should decide to increase supply next March, but also emphasized the need to expand oil and gas production in United States, but in an environment friendly way. "We'd like to see OPEC increase supply and a greater domestic production in the US", said Dana Perino, White House spokesperson. However she also pointed out that the US government believes there's no short term solution to the high prices of energy