High Oil Prices Confound OPEC

RIYADH, Saudi Arabia, Nov. 16 — As oil prices hover around $95 a barrel, OPEC should be in a celebratory mood: its members are reaping record revenue, demand for their product keeps rising and the world economy seems capable of sustaining oil prices that would have seemed suicidal just a few years ago.

But the oil-producing group faces an increasingly uncertain environment. There are fears of a global economic slowdown, an endlessly depreciating dollar and growing concerns about the effect that burning fossil fuels has on the planet’s climate.

As leaders of the Organization of the Petroleum Exporting Countries meet in the capital of Saudi Arabia for a rare high-level summit this weekend, there are signs that high oil prices are a mixed blessing for producers.

“These prices are potentially dangerous, especially if they remain high,” said Mohamed al-Hamli, the oil minister for the United Arab Emirates. “We cannot remain complacent.”

In recent days, oil ministers have resisted calls to increase their output and ruled out any changes in their output level until the next meeting, scheduled in Abu Dhabi on Dec. 5. Saudi Arabia in particular is eager not to overshadow this weekend’s gathering with a discussion about supplies and prices.

At the same time, Saudi officials were relieved to see oil fall back from its intraday record of $98 a barrel last week. No one here wanted to see prices reach the politically charged figure of $100 a barrel just as OPEC leaders were meeting in Riyadh. Oil futures, which have grown fourfold over the last four years, closed at $95.10 a barrel today, up $1.67.

It is only the third time in OPEC’s 47-year history for such a high-level meeting of OPEC heads of state. The first was in Algiers, in 1975, at the height of OPEC’s nationalist period; in 2000, the oil cartel met in Caracas, Venezuela, to come up with a strategy to increase oil prices after they had collapsed to about $10 a barrel in the late 1990s.

This time, the two-day summit will focus on longer-term issues like security of supplies and environmental policy. OPEC is eager to show it is both a reliable oil supplier that has not failed its customers and that is attuned to the current concerns about the environment, especially ahead of a United Nations meeting on climate change in Bali next month. The group wants to start an environmental initiative for producers and consumers to finance carbon capture programs.

“We do not like policies that discriminate against petroleum or fossil fuels in general,” Ali al-Naimi, the Saudi oil minister, said at a news conference on Tuesday. “It behooves us to find a technological process that will make the continued use of fossil fuels possible.”

OPEC’s 12 members, an eclectic group that includes Libya, Nigeria, Saudi Arabia and the latest member, Angola, account for about 40 percent of the world’s oil exports and 80 percent of its proven reserves.

With political and financial backing from Venezuela, Ecuador is set to rejoin the group this weekend after dropping out of OPEC in the 1990s for failing to pay its membership dues.

Among King Abdullah’s guests will be Iran’s president, Mahmoud Ahmadinejad, José Eduardo dos Santos of Angola and Hugo Chávez, the president of Venezuela.

In recent years, OPEC has been particularly successful at managing the market, largely thanks to Saudi leadership of the group. Saudi Arabia, the world’s top oil exporter, has insisted that OPEC act like a businesslike organization and shuns politics.

But President Chávez is becoming increasingly vocal in his calls for OPEC to revert to its more militant position of the 1970s. Earlier this week, Mr. Chávez proposed that OPEC come up with a plan to sell oil to poor countries at much lower prices while charging more from wealthier nations. The cartel, he said, should “raise its level of political action.”

Such language does not sit well with Saudi officials, who are worried about Mr. Chávez’s presence here. During an OPEC meeting in Caracas early last year, Mr. Chávez spoke for two and a half hours, and his off-the-cuff remarks included a mention of his “friend,” Ilich Ramírez Sánchez, the international terrorist better-known as Carlos the Jackal, who hijacked an OPEC gathering in 1975.

There were unconfirmed reports here that Mr. Chávez plans to broadcast his weekly show “Aló Presidente” live from Riyadh. After the meeting is over here, he is scheduled to fly to Tehran to meet with Mr. Ahmadinejad.

Hossein Adeli, the chairman of the Tehran-based Ravand Institute for Economic and International Studies, said there would always be such a temptation to bring politics into OPEC. “Oil and gas are the most political commodities in the world,” he said.

Tag Cloud

External Information

Additional Information

Where Am I?