LONDON – Oil prices fell nearly 2.5 percent Monday after OPEC promised to keep pumping near maximum capacity, but losses were limited as the cartel conceded that it could not cool the red hot market.
The Organization of Petroleum Exporting Countries, the source of more than a third of the world's oil, kept its production ceiling of 28 million barrels per day unchanged at talks by ministers in Doha, accepting that it was powerless to rein in runaway prices.
"OPEC's move was to be expected, and there is nothing really new going on in Iran," said Muhammad-Ali Zainy of the Center for Global Energy Studies. "The drop in prices is more profit-taking than anything else."
OPEC ministers said geopolitical tensions in Iran, Nigeria and other key oil-producing nations have added as much as $15 per barrel to the price of oil.
"The market determines the oil price," Saudi Oil Minister Ali Al-Naimi, OPEC's most influential voice, told reporters at the International Energy Forum in Doha.
"You know, and I know, that the reason the price is where it is is not from a shortage of supply," he said.
Many analysts saw little chance of a sustained pull-back in prices, which have climbed more than 20 percent since January.
Investment funds are pouring cash into the market amid growing concerns surrounding Iran's nuclear program, and worries about the state of summertime U.S. gasoline supply.
"There is little prospect of oil prices weakening, unless geopolitical tensions fade away, or there is a collapse in oil demand, neither of which seems likely at the moment," the Center for Global Energy Studies said in a monthly oil report.
Iran's oil minister, Kazem Vaziri, sought to calm the market over the weekend by reiterating that the oil weapon was off the table in its dispute with the West, which fears Tehran wants to build an atomic bomb.
"We strongly believe there is no reason for sanctions, but in any case we will not cut our oil exports," he said in Doha.
Iran's foreign ministry said over the weekend its decision to enrich uranium was irreversible, despite the threat of sanctions or military action.