Oil price fears as Opec maintains output

OPEC announced yesterday that it will hold oil production steady until the organisation of petroleum exporting countries meets again on 17 January to assess oil prices, despite calls for production increases that would help ease high oil prices.

OPEC announced yesterday that it will hold oil production steady until the organisation of petroleum exporting countries meets again on 17 January to assess oil prices, despite calls for production increases that would help ease high oil prices.

At meetings over the weekend, OPEC said an increase in production could cause prices to fall suddenly if demand subsides, as expected in the spring.

Amid speculation that OPEC is gearing up for a cut in production early next year, the Kuwaiti oil minister, Sheikh Saud Nasser al-Sabah, said all output plans - either boosting or cutting production - were on hold until OPEC could reassess the market in January.

"We are just monitoring the situation and will make decisions when necessary," said Ali al-Naimi, the Saudi oil minister

Though the door was left open for an increase in production, Qatari oil minister Abdullah al-Attiyah said: "We have already introduced large production hikes. The market needs time to absorb the oil."

At $32 a barrel for benchmark Brent crude, the oil price remains well above the group's $22-$28-a-barrel target range. Many OPEC states are more worried about a post-winter price slide than the impact of high energy costs on inflation.

OPEC is convinced that the 3.7 million barrels daily (16 per cent) it has added to production this year is enough to rebuild lean petroleum stockpiles and bring prices below $28.

The Asia-Pacific Economic Co-operation nations, meeting in Brunei yesterday, called on OPEC to increase supply, but Mr Naimi said the full impact of this year's production increases had yet to be felt.

"It takes time to assess what has been done. I believe the oil is in the market. It took us 18 months to recover from the price collapse and we've had less than a year of the output increases," he added.

OPEC yesterday appointed the Venezuelan oil minister Ali Rodriguez as secretary-general for three years from 1 January.