VIENNA – OPEC wants to drive oil prices back up after a six-month market slump that is helping nurse the global economy back to good health, ministers said on Wednesday.
Preparing to extend a freeze on its output at a meeting on Friday, the Organization of the Petroleum Exporting Countries wants to cement prices back in its $22-$28 a barrel target range, they said.
"Remember that we gave the world economy a lift with favorable conditions. A contribution from low energy prices was good for the world economic recovery but now we should return to normality in terms of price levels," said Venezuelan Oil Minister Alvaro Silva.
"It is reasonable for us to seek $25. We are not seeking to change the ($22-$28 reference) band because this is acceptable to the world," he told reporters on his arrival in Vienna.
Oil prices fell sharply when the September 11 attacks exacerbated a slowdown in economic growth, undermining petroleum demand. Now prices are at a six-month high, lifting OPEC's crude reference basket above $22 a barrel this week for the first time since September.
At the time the cartel appeared powerless to prevent a fourth quarter price slump, but now it seems keen to take the credit for helping trigger an economic revival.
OPEC insiders said producer nations felt they had performed a valuable service by allowing prices to fall in the immediate aftermath of September 11. The group eventually implemented a fourth output cut in a year in January after leaning on independent producers for support.
"The price now is not too high," said one senior Gulf OPEC insider. "In fact, the world owes OPEC a thank-you note. We gave the world $300 billion through lower prices and helped them jump-start their economies."
Benchmark Brent, which trades at about a $1.50 premium to the OPEC basket, was up 27 cents in late Wednesday trade at $23.97 a barrel.
KEEPING TAPS TIGHT
Producers want to be sure a firm recovery in demand is in place and that inventories are under control before they open the taps again.
Ministers said it was too early to consider easing output limits now keeping idle some five million barrels daily, nearly 20 percent, of output from the group that controls two-thirds of world exports.
They plan to keep restrictions in place for another three months and meet again in June to decide policy for the second half of the year.
"It seems very early to be talking about increasing production," Silva said. "I can't see any change."
"Everybody agrees that we have to keep producing reduced volumes but also at the same time follow how the market is developing to understand what to do next," said Algerian Oil Minister Chakib Khelil.
OPEC over the past year has maximized revenues by preventing a price crash with low supplies, but at the expense of conceding market share to rival producers.
If it stalls too long on an output increase industrial nations will worry that a renewed surge in energy costs could stunt the economic recovery.
"They will need to raise output some time in the third quarter so at this meeting we will be looking for signs of their future intentions," said Gary Ross of consultancy PIRA Energy.
Many economists believe cheaper fuel prices over the past six months boosted consumer spending on other goods, particularly in the oil-thirsty United States. But they worry that renewed energy inflation could harm economic recovery by hitting consumers in the pocket.
The United States already has made clear that it would be uncomfortable with prices going much higher than they are now. U.S. Treasury Secretary Paul O'Neill told Middle East OPEC countries last week that Washington favored a range of $18-$25 for U.S. oil that on Wednesday traded at $24.30.
Washington's targeting of OPEC member Iraq as it widens the net in the U.S. war against terror has helped support prices.
OPEC has persuaded non-aligned producers that joined its supply management campaign last December to stay on board.
Mexico, Norway and Oman say they will extend their curbs until the end of June. Russia is expected to follow suit.
Moscow agreed in principle on Wednesday with Russian oil companies to keep in place a reduced schedule of exports for the second quarter. Deputy Prime Minister Viktor Khristenko said the final program will be agreed with the government next week.