OPEC Considers Oil Output, Iran-Saudi Rivalry
By GEORGE JAHN
VIENNA (AP) â¿¿ Tough decisions await OPEC oil ministers sitting down this week for a policy meeting. The 12-nation cartel has to deal not only with how much crude to produce for the next few months but must also fill a senior position coveted both by Saudi Arabia and archrival Iran.
With world supplies ample, there is some rationale for curbing output when the ministers meet Wednesday in Vienna.
Oil inventories in the major industrialized countries are high, with an energy boom in the United States resulting in stocks of oil at their most plentiful there since 2008. Meanwhile, the Organization of the Petroleum Exporting Countries is pushing out over 31 million barrels a day. That's substantially more than its official daily ceiling of 30 million barrels and the highest in four years, when calculated over a year.But other factors suggest there may be no change. The world economy remains weak, despite some signs of a halting recovery in the United States and a bottoming out in the downturn in China. Reducing output now would spike prices, endangering the fragile recovery and further cutting back on the world's oil consumption. Then there is the "fiscal cliff." The U.S. risks slipping into recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions take effect on Jan. 1. Mideast tensions focused on Syria, Israel and the Palestinians and Iran's nuclear program could also drive up prices, even without any OPEC cutbacks. As always, the price of a barrel of crude is likely to be the main decider. The average cost of the group's oil basket â¿¿ a mix of grades produced by OPEC countries â¿¿ has been above $100 a barrel for the last two years â¿¿ a first in OPEC's history. Brent crude, which is used to price international varieties of oil, has also been well over $100 a barrel for this year.
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