CAIRO - THE Organisation of Petroleum Exporting Countries froze its oil output quota on Saturday after informal talks in Cairo but vowed to take any action necessary to balance the market next month.
Slumping demand in the face of a global economic downturn has sent prices crashing by about two-thirds from record highs above 147 dollars a barrel just four months ago.
'Ministers agreed to take any additional action on December 17th (in Oran, Algeria) to balance oil supply and demand and achieve market stability,' Mr Chakib Khelil, who is also Algeria's energy minister, told reporters.
The expected decision to maintain current output came despite oil prices tumbling close to four-year lows earlier this month, sparking alarm among Opec members about plunging revenues.
Libyan Oil Minister Shukri Ghanem told journalists that there was 'no cut here' after the meeting in the Egyptian capital.
The market continued tumbling this year despite OPEC output cuts in September and October that took the output quota to 27.3 million barrels per day, excluding Iraq.
'We took note of the serious deterioration in the world economy and its serious consequence on the oil price,' Khelil said.
Opec, which pumps 40 per cent of the world's oil, also predicted on Saturday that prices would not recover before the middle of next year.
'The prices will not begin to rise before the second half of 2009,' said Secretary General Abdalla Salem El-Badri.
Mr Khelil, addressing a news conference, also acknowledged that the global financial crisis and looming worldwide recession would dampen demand significantly for the first six months of 2009.
'We realise that in the first quarter of next year we are probably going to have a decline in demand, and in the second quarter we are going to have a big decline,' he said.
Mr Badri added that Opec ministers have reached a consensus about cutting output at the next production meeting in Oran, Algeria, on December 17.
Analyst Bill Farren-Price at Medley Global Advisers said that the cartel needed to reduce its output by a minimum of one million barrels next month.
'They will definitely have to cut... at least a million barrels a day, but it really depends on how much they've done' in complying with previous reductions, Mr Farren-Price said.
Mr Badri also confirmed that major non-Opec oil producers Russia, Norway and Mexico will also attend the Oran gathering.
Russia, one of the world's largest producers of oil and gas, said earlier this week that plummeting prices were hurting producers and that it would coordinate its strategy with Opec.
Mr Khelil said the cartel had achieved an 85-per cent compliance rate among members for the previous two output cuts in September and October, citing industry sources.
The group called the consultative gathering to discuss how to shore up prices which have tumbled from record highs this year amid a looming global recession that hit demand for energy.
Earlier this month, London's Brent North Sea oil plunged to 47.40 dollars (S$71.75) and New York crude touched 48.35 dollars - both the lowest points for nearly four years.
That compared with respective record highs of 147.50 and 147.27 dollars set on July 11, when fears of supply disruptions sent prices rocketing.
Meanwhile, Saudi Arabia's King Abdullah said in an interview published in Kuwait that a price of 75 dollars a barrel would be fair - an indication that cuts might be forthcoming to lift the flagging market.
Saudi Arabia is the world's top crude exporter and by far the most important player in Opec, which pumps 40 per cent of global crude supplies.
Saudi Oil Minister Ali al-Nuaimi had said ahead of the Cairo meeting that a decision on production would be made in December.
Opec comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
A 13th producer, Indonesia, has suspended membership and officially leaves the cartel at the end of 2008, while Iraq does not have an output quota because of the country's post-war strife. -- AFP
