DOHA, Qatar Several key OPEC ministers on Sunday dismissed the need for an emergency meeting to address oil prices that have fallen by over 10 percent in just days, but voiced concern about the impact of the Greek debt crisis on crude markets.
Qatar’s oil minister, Abdullah bin Hamad al-Attiyah, said the market was moving in reaction to the “psychological” impact of the Greek financial crisis and concerns that it could expand elsewhere in Europe.
Oil producers “have to wait calmly so that we know what will happen,” al-Attiyah told reporters, speaking during the Arab Energy Forum in the Qatari capital. “The world is now in a tunnel, groping for an exit, but there is so far no light at the end of the tunnel.”
The benchmark light sweet crude oil futures contract for June delivery had settled at around $75 per barrel on Friday, recording a $2 per barrel drop that came in tandem with a slide in world equity markets amid fallout from concerns over Greece’s sovereign debt crisis. The fall brought crude to about $12 per barrel lower than its 18-month high last Monday, a peak that reflected optimism that the world economy was on the rebound.
The 12-nation Organization of the Petroleum Exporting Countries has not changed its output quotas since late 2008 when it capped a record series of cuts to help boost prices that had plummeted on the back of the global financial meltdown.
But even as the production cuts enacted then by the producer group — which supplies around 35 percent of the world’s oil — boosted prices, its compliance with its quotas has gradually eroded. Analysts estimate OPEC compliance with their targets is around 50 percent — a level which has done little to sap the oversupply of oil in the market.
Saudi Oil Minister Ali al-Naimi, whose country sits atop the world’s largest proven crude reserves and is OPEC’s de facto leader, said he was “not worried at all.”
“OPEC is always in movement, and it is not silent,” al-Naimi said.
Algerian Oil Minister Chakib Khelil echoed al-Attiyah in pointing to the Greek financial crisis as the catalyst behind oil’s current declines. But Khelil said he expected the market would stabilize, with oil ranging between $80 to $90 per barrel this year.
OPEC is scheduled to meet again in October, and its members have so far largely resisted the temptation to reduce their official production targets as a way of supporting prices. The reluctance has largely hinged on worries that any serious moves by the group could jeopardize the world economy’s fragile recovery at a time when demand for petroleum products is still picking up very slowly. Also factoring into the decision is OPEC’s lack of compliance with its current output targets.
The calls by Qatar and Algeria for maintaining the status quo came a day after Kuwait’s oil minister indicated the group could potentially meet before its October gathering if prices drop below $65 per barrel.
But Sheik Ahmed al-Abdullah al-Sabah also stressed Saturday that a greater focus on compliance by OPEC would help support prices.