Opec to keep oil flowing o help fragile recovery take root

Opec ministers in Vienna for a meeting this week look almost certain to keep the oil cartel's production steady, with the "green shoots" of world economic recovery too fresh to justify a cut, ministers and analysts say.

The price of crude has risen sharply to about $60 a barrel in recent weeks, which has relieved the pressure on Opec members even though the level is still below the $75 they would like to see.

Forcing prices higher, however, would dampen demand when major economies are critically weak.

The most influential member of the group, Saudi Arabia, was clear about its intentions on Tuesday when Oil Minister Ali al-Nuaimi told journalists here that Opec would "stay the course".

A host of ministers arrived in Vienna yesterday ahead of a formal output meeting today when members are expected to maintain the status quo, a production target of 24.84 million barrels per day.

The Organisation of Petroleum Exporting Countries, which pumps 40 per cent of world oil, cut its production target three times late last year to stabilise prices which tumbled from record highs above $147 per barrel in July 2008 to $32.40 in December.

The group seeks to influence prices by setting itself an output quota, with members given individual production targets which are reviewed at regular meetings.

Mr al-Nuaimi said he was worried about high oil stock levels in industrialised countries - a sign that demand is weak - but the feeling among analysts is that OPEC will prefer to hold their fire and let an economic recovery take root.

King Abdullah of Saudi Arabia was optimistic about the future of the oil market in an interview with Kuwaiti daily Assiyassa published on Tuesday.

"We are currently seeing a fast recovery for the global economy and are seeing indications of a higher demand for oil," he added.

On Sunday, Algerian Energy Minister Chakib Khelil also forecast that Opec ministers would maintain current production quotas.

"We need the world economy to pick up again and I think maintaining the status quo goes in that direction," he said on the margins of a meeting of G8 energy ministers in Rome. "Maintaining the status quo, given that prices are rising, is a wise solution. Why break the cycle of growth that we are already seeing on the horizon?" he added, noting that a consensus was building among Opec members.