OPEC Seen Leaving Crude Production Untouched - at Least for Now.
OPEC is almost certain to maintain its current production target this week -- but analysts say the cartel could be forced into action if rising crude oil prices start having a chilling effect on the global economy.
With the summer driving season over and demand for gasoline and diesel fuel slackening, the 12-nation Organization of Petroleum Exporting Countries is feeling little pressure to raise its official output quota of 25.8 million barrels a day when oil ministers meet Tuesday in Vienna.
OPEC Secretary-General Abdalla Salem El-Badri and at least two cartel members, Iran and Libya, have said they believe there is plenty of oil to meet world demand and no compelling reason to boost production.
All that could change -- and quickly -- if markets clamor for more crude and prices already hovering near $75 a barrel edge much higher.
"OPEC faces a real dilemma," said John Kingston, global director of oil at Platts, the energy research arm of McGraw-Hill Cos.
Kingston said the cartel, which produces about 40 percent of the world's crude oil, must balance projections of a tight market in the next few months against concerns about the crisis in the U.S. subprime mortgage industry and worries "that a significant slowdown in demand could be around the corner."
Subprime mortgage lenders have cut loans to prospective U.S. home buyers, feeding a housing slump that has stoked fears among energy investors of a wider economic slowdown and reduced demand for oil and gasoline.
The Paris-based International Energy Agency has urged the group to raise crude output, arguing that global demand is likely to outstrip supply with the approach of winter in the Northern Hemisphere.
OPEC already is quietly pumping over its official output target, Platts said in a survey released Friday.
Production by the 10 cartel members that adhere to the quota "has been steadily creeping up over the summer" and is now about 1 million barrels a day over, it said.
Other estimates suggest the 10, which exclude Angola and Iraq, are pumping closer to 30.3 million barrels a day.
"It doesn't seem there would be any need for a hike in OPEC oil supply," said Hojjatolah Ghanimifard, director of international affairs at Iran's state-run National Iranian Oil Co.
Analysts said an increase could come before the next OPEC meeting Dec. 5 in the United Arab Emirates if crude prices move closer to $80 a barrel, winter comes cold and early, or a hurricane knocks out a key refinery in the Gulf of Mexico.
Crude hit a record $78.77 a barrel in early August on the New York Mercantile Exchange. Many market-watchers see $80 as the new threshold.
"$80 is the mark they'll be looking at," said Eshan Ul-Haq, chief analyst at PVM Oil Associates in Vienna.
John Hall, of London-based John Hall Associates, said he thinks prices are $15 higher than they ought to be. OPEC, he contends, is being "a little bit greedy."
The 12 OPEC members are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
OPEC is almost certain to maintain its current production target this week -- but analysts say the cartel could be forced into action if rising crude oil prices start having a chilling effect on the global economy.
With the summer driving season over and demand for gasoline and diesel fuel slackening, the 12-nation Organization of Petroleum Exporting Countries is feeling little pressure to raise its official output quota of 25.8 million barrels a day when oil ministers meet Tuesday in Vienna.
OPEC Secretary-General Abdalla Salem El-Badri and at least two cartel members, Iran and Libya, have said they believe there is plenty of oil to meet world demand and no compelling reason to boost production.
All that could change -- and quickly -- if markets clamor for more crude and prices already hovering near $75 a barrel edge much higher.
"OPEC faces a real dilemma," said John Kingston, global director of oil at Platts, the energy research arm of McGraw-Hill Cos.
Kingston said the cartel, which produces about 40 percent of the world's crude oil, must balance projections of a tight market in the next few months against concerns about the crisis in the U.S. subprime mortgage industry and worries "that a significant slowdown in demand could be around the corner."
Subprime mortgage lenders have cut loans to prospective U.S. home buyers, feeding a housing slump that has stoked fears among energy investors of a wider economic slowdown and reduced demand for oil and gasoline.
The Paris-based International Energy Agency has urged the group to raise crude output, arguing that global demand is likely to outstrip supply with the approach of winter in the Northern Hemisphere.
OPEC already is quietly pumping over its official output target, Platts said in a survey released Friday.
Production by the 10 cartel members that adhere to the quota "has been steadily creeping up over the summer" and is now about 1 million barrels a day over, it said.
Other estimates suggest the 10, which exclude Angola and Iraq, are pumping closer to 30.3 million barrels a day.
"It doesn't seem there would be any need for a hike in OPEC oil supply," said Hojjatolah Ghanimifard, director of international affairs at Iran's state-run National Iranian Oil Co.
Analysts said an increase could come before the next OPEC meeting Dec. 5 in the United Arab Emirates if crude prices move closer to $80 a barrel, winter comes cold and early, or a hurricane knocks out a key refinery in the Gulf of Mexico.
Crude hit a record $78.77 a barrel in early August on the New York Mercantile Exchange. Many market-watchers see $80 as the new threshold.
"$80 is the mark they'll be looking at," said Eshan Ul-Haq, chief analyst at PVM Oil Associates in Vienna.
John Hall, of London-based John Hall Associates, said he thinks prices are $15 higher than they ought to be. OPEC, he contends, is being "a little bit greedy."
The 12 OPEC members are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
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