By GEORGE JAHN
OPEC countries failed Thursday to agree on measures to influence crude supplies and prices, in a missed opportunity to show the resolve that for decades let them set how much consumers and industries worldwide would pay for gasoline, heating and related necessities.
At the same time, OPEC officials argued the cartel was alive and well, scoffing at suggestions that its authority was eroding to the point where it will soon be negligible.
“Don’t take that (to mean) that OPEC is dead,” said Secretary General Abdulla al-Badri. “OPEC will be powerful, will be strong. OPEC is alive.”
As they ended their meeting, the ministers suggested they were satisfied that prices had recovered from a 13-year nadir earlier this year. They “confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers,” said their closing statement.
2 Stocks To Buy Before The Market Closes Friday
The Motley Fool
Do You Know The Signs Of Rheumatoid Arthritis?
Still, that upward trend in the oil price is fragile, and the decision to essentially let OPEC members continue producing as much as they want or can had immediate effect.
Expectations of at least an attempt by the Organization of the Petroleum Exporting Countries to show unified muscle had seen the U.S. benchmark oil trade near $50 a barrel earlier in the day. Shortly after the meeting ended, it was down 88 cents at $48.14 a barrel.
For decades, the 13-nation cartel was able to regulate prices by throttling or increasing production. But attempts to impose production ceilings have foundered over recent years, with countries ignoring them and producing as much as they wanted or could. And with outside players like the U.S. and Russia increasing their market share, recent meetings have failed to re-impose unity.
One idea was to abandon a firm production target. Experts say OPEC countries could have agreed on a sliding ceiling that could shift between two benchmarks, both above 30 million barrels a day.
That could have addressed Iranian resistance to curbing its output. Since the lifting of nuclear-related sanctions this year, Iranian production has roared back to nearly four million barrels a day, around the same level as before the imposition of the sanctions and Iranian oil minister Bijan Namdar Zangeneh had indicated his country would oppose any output restrictions.
Although the ministers were unable even to reach such a flexible agreement, OPEC president Mohammed Bin Saleh al-Sada said that did not mean the organization was fading. Instead, he described the cartel as “a dynamic living organ responding to changes.”
“The world has changed, is changing and will change,” he told reporters, “so OPEC is responsive to change… interacting with facts on the ground. For today’s market conditions OPEC is responding appropriately.”
But Bob Minter, analyst at Aberdeen Asset Management Investment, said the meeting failed to “at least signal that members can agree on something.”
“This should have been an easy meeting to re-establish OPEC relevance but they missed the opportunity,” he said.
The meeting managed to resolve one dispute that had forced it to repeatedly extend al-Badri as secretary general.
The closing statement named Mohammed Sanusi Barkindo of Nigeria as his replacement as of Aug. 1. That ended years of dispute between rivals Saudi Arabia and Iran, which had put forward their own candidates and refused to agree on a compromise.
The ministers also agreed to admit Gabon as the 14th member, effective July 1.
Andras Zagoni-Bogsch has contributed to this report.