MercoPress. South Atlantic News Agency

OPEC policy “unchanged” for next September meeting

OPEC is likely to keep oil output policy unchanged at its meeting in September as prices remain high despite a sharp fall from July's peak, a source from the Organization of Petroleum Exporting Countries said on Monday.

US crude traded at 115 US dollars a barrel on Monday, and has fallen over 30 US dollars from July's peak. Top oil exporter Saudi Arabia pledged to boost output to a 27-year high in July to meet rising demand and help tame record prices. But some of OPEC's more hawkish members have said that the group should trim output at its next meeting on September 9 if prices continue to weaken. "I think output will stay the same" the OPEC source said. "The price is still high". OPEC members prefer prices that prevent long-term demand erosion and encourage global economic growth, the source said, declining to define an ideal price. OPEC pumps more than a third of the world's oil. Officials added that OPEC has been reluctant to give a price target partly because different members of the group have different price needs to balance their budgets. Venezuela and Iran are among the OPEC members in need of the highest prices and have been the first to publicly call for the group to trim output if the market keeps falling. Global oil production was more than sufficient to meet demand in the short-term, but consumption should rise in winter, the source said. Seasonal demand should soften the short-term impact of the fall in consumption from the slowing economies of industrialized countries. The effect of the slowdown on oil demand would be clearer after next northern hemisphere winter. "There are a lot of uncertain issues in the market" said the OPEC source. "We don't know what demand will be and we have to keep a close eye on the US economy. We don't know what supply will be from producers outside of OPEC. We don't know about inventories". US demand fell 800.000 barrels per day on the year in the first half of 2008, the steepest fall in 26 years. But in the long-term, fundamentals looked tight, the OPEC source said. Emerging economies led by China continued to show strong demand growth, while producers outside of OPEC struggle to boost output. "In the long term, the market is tight," the source admitted. "Demand for oil is still growing, and alternatives to oil cannot answer the need overnight, especially not in developing countries that can't afford the technology".