Opec insists price of oil is not stifling world growth

OPEC, the oil producers' cartel, yesterday agreed to keep production limits unchanged, saying there was little sign that crude prices were stifling world growth.

OPEC, the oil producers' cartel, yesterday agreed to keep production limits unchanged, saying there was little sign that crude prices were stifling world growth.

Ministers from the 11 member countries refused to rule out a cut in quotas later in the year, saying they might hold emergency talks ahead of a planned meeting in Iran in March.

Opec agreed to keep its output ceiling of 27 million barrels a day unchanged after a two-day meeting at the headquarters in Vienna.

"Aware of the expected seasonal drop in demand in the second quarter, and given the stock-build, which might be accentuated in light of the current market situation, the conference decided to continue monitoring market developments," Opec said in its communiqué.

In an unexpected move, the cartel decided to abandon its old price band of $22 to $28 a barrel, which has lost any credibility in the light of the year-long surge in prices. "Prices have remained outside the band for over a year due to market changes that have rendered the band unrealistic," it said.

The cartel said it had no plans to set another target, but comments from ministers pointed to an informal objective of close to $40 a barrel.

Referring to US prices, which tend to be higher than other crudes, Edmund Daukoru, Nigeria's presidential adviser on energy, said he was "comfortable" with a range of $45 and $55. "Between $45-$55 has not affected global economic growth."

Kuwait's Opec president, Sheikh Ahmad al-Fahd al-Sabah, said: "I believe that $35 is a suitable price as an average price for the Opec basket of crudes."

Prices in New York closed on Friday at $47.15 a barrel, having peaked at about $55 last autumn. Despite that world economic growth last year posted a three-decade high.