CAIRO, Egypt – OPEC held off on announcing new oil output cuts on Saturday, but its alarm over falling demand and a slumping economy potentially laid the groundwork for a big reduction when it meets again in a matter of weeks.
Chakib Khelil, Algeria's oil minister and the group's president, said the Organization of Petroleum Exporting Countries ministers noted "with concern the continued deterioration of the global economic situation and its impact on oil demand."
The ministers, he said in a statement, agreed to "take any additional action ... to balance oil supply and demand, and achieve market stability" during their Dec. 17 extraordinary meeting in Oran, Algeria.
The outcome of Saturday's meeting in Cairo, convened about a month after the group decided to pull 1.5 million barrels per day of oil from the market, seemed unlikely to put a floor beneath crude prices that have fallen by around 60 percent from their mid-July highs of $147 per barrel.
Saudi Arabia, the 13-member organization's top exporter and kingpin, broke with its usual silence about specific prices and cited $75 per barrel as a favorable target. King Abdullah, in an interview with a Kuwaiti newspaper published Saturday, said that would be a "fair price" — a message echoed by his top oil official in Cairo.
"Eventually, if we want the marginal producer to produce and help the world supply, then we need to give them a better price," Saudi Oil Minister Ali Naimi said.
But it was unclear how the group — supplier of 40 percent of the world's crude — could realize that target soon, given the lack of action at Saturday's meeting.
Some analysts questioned the wisdom of waiting in light of the current weak oil prices.
"Another dumb move by OPEC, unless of course they want lower crude oil prices," said Vincent Lauerman, OPEC expert and president of the Calgary, Canada-based consultancy Geopolitics Central.
Ahead of the meeting, the U.S. benchmark light, sweet crude futures contract settled a penny lower Friday at $54.43 in an abbreviated session on the New York Mercantile Exchange.
Others said the decision may have been a way for the group to push through a larger cut at the Algeria meeting.
Viewed in this light, the lack of a decision may be a strategic one aimed at preventing the group from suffering the same outcome it saw after the Oct. 24 Vienna meeting: Cut now and see prices fall again could further undercut its credibility, analysts said.
"They want to do everything they can to support prices, but do it in a way they can save face," said Phil Flynn, an oil analyst at Alaron Trading Corp. in Chicago. He expects the group to implement a cut of as much as 1.5 million barrels in Algeria next month.
If the Cairo gathering did not net a cut, it allowed the group to present a united front before a market that has recently been shrugging off their complaints about low prices.
Members were eager to brush aside persistent concerns that some countries fail to adhere to the production quotas OPEC has said it needs to be effective.
"We are assuming that everyone will be compliant — hopefully 100 percent compliant," said Qatari Oil Minister Abdullah Bin Hamad al-Attiya. "Don't take me to the past, take me to the future."
In general, the oil ministers seemed optimistic about compliance with the previous round of cuts, announced in Vienna. Khelil put it at about 85 percent, others said 100 percent.
Venezuela has been one of the countries cited as being more liberal with its production — a charge its oil minister denied on Saturday.
"Venezuela is fully compliant with the last cut decision in October," said Rafael Ramirez. "Venezuela's view is OPEC's view. We have to have a million barrels a day production (cut). But we have to wait for December."
Heading into the meeting, Khelil, the group's president, said a key aim was to assess the impact of previous reductions, while further studying the market and the impact the global economic meltdown was having on steadily falling oil demand.
He stressed the same point after the meeting, telling reporters that the current volatility merited a measure of caution and the need to wait until Algeria for a decision. The exit of speculators, who OPEC has said were the main reason behind the prices spikes earlier this year, will add some clarity to the oil market, he said.
"Now, we have real fundamentals," said Khelil, who added that the group is concerned about too much supply in the market and the difficulty some producers have in finding buyers.
Analysts said delaying a decision also gives prices room to deflate further, putting increased pressure on large nonmembers such as Russia to agree to join OPEC in any future production cuts while helping ensure compliance among its own members.
"It's easier to push other OPEC countries to comply if they start to see that yes, we could go lower," said Olivier Jakob of Petromatrix in Zug, Switzerland.
Russia has already indicated it backs OPEC's efforts to boost prices, though many in the market have questioned whether the oil giant would be willing to implement cuts of its own at a time when it sorely needs oil revenue.
Several OPEC ministers voiced hope that other oil producers would work more closely with the bloc, with Qatar's al-Attiya saying that "at the end of the day we need the help of everybody, including non-OPEC countries."
"Because if we produce oil and no one buys it, this is a concern. And this is what we're seeing today," he said.