OPEC urges US, others to do more to help economy

March 16, 2009 7:21:12 AM PDT
OPEC's secretary general on Monday blamed the U.S. and other leading industrialized countries for the global economic mess and challenged them to clean it up, saying his organization has already done its share. "We have not seen any positive actions from the countries that have created this problem," said Abdalla el Badri, adding that despite a "lot of stimulus actions, a lot of bailouts .... we have not seen any positive signs" of recovery.

El Badri also warned non-OPEC oil producers not to "take advantage" of his organization, an apparent jab at Russia, which has resisted calls from the Organization of the Petroleum Exporting Countries to formally coordinate production policies.

His unusally outspoken comments came a day after oil ministers of his 12-nation crude producers' club decided to maintain current production levels unchanged while focusing on eliminating overproduction by some members.

The move was an attempt to support oil prices - ending all OPEC overproduction would remove about 80,000 barrels a day from the world's supply - without causing them to spike.

Benchmark crude was trading more than $2 down by noon in Europe Monday in reaction the OPEC decision.

The decision reflected the realization that larger output cuts at a time of global economic crisis could ultimately backfire - by further depressing demand and driving down prices - and could also deepen the perception that OPEC is out for profits, whatever the costs to the global economy.

El Badri insisted OPEC was not concerned about its image, saying the group was ready to accept unrealistically low prices for the short term as part of "paying its share for the (bad) world economy ... for this mess ... created in advanced countries."

He noted there were no signs of improvement in the global economy despite the range of bailout plans made by governments in the U.S., Europe and other industrialized countries.

"That means that what they are doing they are doing very slow or they are not doing anything at all," he said. "The United States all the time says we need action not words, so we would like to see ... action and not words.

"The advanced countries who created this mess, they have to take the burden, more burden ... than us because we did not contribute to this crisis."

OPEC cuts agreed on since September were meant to take a daily 4.2 million barrels from the world's supply. But the 11 members that are under production quotas are still overshooting their joint daily target level of just under 25 million barrels by 21 percent above formal set limits.

While 100 percent compliance with quotas is unlikely, even an additional 10 percent would take more than 400,000 barrels a day off markets, slicing into oversupply while reducing the price shock that an outright cut in existing quotas would have caused.

The United States and other industrialized countries are sure to applaud OPEC's decision not to cut current production levels. But while alluding to reports that President Barack Obama called Saudi king Abdullah and U.S. Energy Secretary Steven Chu's pledge to lobby OPEC ministers, el Badri said his organization did not bow to pressure from Washington.

"Our decision has nothing to do with that telephone call," he said.

The presence of Russian Deputy Premier Igor Sechin at the Vienna meeting also was closely watched. Russia has toyed with the idea of working more closely with OPEC to control the flow of oil to the world and Sechin on Sunday announced that his country is reducing crude sales.

That seemed at first sight a boost for OPEC, which has repeatedly urged Russia for support as the world's second largest producer after the Saudis. At its peak in early 2008, Russia was producing 9.5 million barrels of crude a day.

But those levels have been shrinking and previously announced cuts could be just a way of dressing up Moscow's inability to keep up present output levels because of lagging investment that is expected to result in an output decline of around 2 percent this year.

OPEC officials have said privately that Russia - which sees itself as a leader on the world stage - is unlikely to give up its energy independence by joining OPEC. In an apparent allusion to Russia, el Badri on Monday urged "the larger producers" outside OPEC not "to take advantage" while his organization tries to manage crude supply and demand.

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On the net: http://www.opec.org

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