MercoPress. South Atlantic News Agency

OPEC freezes oil output and blames US for high crude prices

OPEC accused the United States on Wednesday of economic “mismanagement”, which it said is pushing oil prices to new record highs and rejected calls to increase output. Oil prices surged for the first time past 104 US dollars a barrel after OPEC's announcement and a US government release showing a surprise drop in crude stockpiles.

The Organization of Petroleum Exporting Countries said it would maintain current production levels 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 called "the mismanagement of the U.S. economy" and that US problems were a key factor in the organization's decision to hold off on any action. "If prices are high, definitely they are not due to a lack of crude. They are due to what's happening in the US" Khelil said. "There is sufficient supply. There's plenty of oil". Khelil's comments came one day after US President George W. Bush warned that "I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices". On Wednesday White House spokesman Dana Perino said Bush was "disappointed" OPEC didn't do more to rein in prices, which some say are pushing the U.S. economy into recession. The OPEC release from Vienna said that "in reviewing the prospects for the oil market, the Conference highlighted the economic slowdown in the US, which, together with the deepening credit crisis in financial markets, is increasing the downside risks for world economic growth and, consequently, demand for crude oil". OPEC said that "the market is well-supplied, with current commercial oil stocks standing above their five-year average" and further noted with concern that the current price environment does not reflect market fundamentals, as crude oil prices are being strongly influenced by the weakness in the US dollar, rising inflation and significant flow of funds into the commodities market". Therefore in spite of the seasonally low demand in the second quarter it was decided "to maintain OPEC production levels", emphasizing that increased uncertainty and volatility call for continued market vigilance and reiterated the commitment of Member Countries to market stability and ensuring adequate supplies. Khelil said he and OPEC's secretary-general had been authorized to call an extraordinary meeting or hold phone consultations "at any time, depending on the pressures on the market", an apparent gesture to ease global economic jitters. OPEC 13 member countries have a daily output of 32 million barrels, which helps to satisfy 40% of the world's crude demand. Oil shot up a dramatic 19% last month as the falling US dollar prompted speculators and other investors to shift cash to crude and other commodities as a hedge. 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