Top officials with the Organization of Petroleum Exporting Countries are meeting in Vienna Sunday, and are expected to make a decision about possible cuts in oil production to boost prices. The meeting is being watched closely by the United States and other industrial countries, with some officials warning new cuts and higher oil prices could keep the global economy mired in a recession.
OPEC members gathering in Vienna face a difficult decision. Many of the oil-exporting countries would like to see higher prices. But Saudi Oil Minister Ali al-Naimi says the global recession makes that difficult. "You have to understand, the world economy is not as healthy as it should be. So you should expect demand, worldwide, to be down," he said.
And he fears that, as long as the global recession persists, demand for oil will continue to weaken. "That would be a guess, but you know, the global oil demand in 2009 is significantly less than 2008," he said.
OPEC has already taken action to help boost prices from lows near $30 a barrel, cutting production by 4.2 million barrels per day dating back to September of last year. Saudi Arabia says better enforcement of those cuts would be enough to help. But, some cartel members, including Algerian Oil Minister and former OPEC President Chakib Khelil, are calling for additional cuts to drive prices higher.
Energy analyst John Hall warns that would be a mistake. "Politically it will be a very, very bad move indeed for OPEC to fuel recession by increasing oil prices further, particularly at this time," he said.
Both the United States and the International Energy Agency, which advises almost 30 countries on energy issues, agree. U.S. Energy Secretary Steven Chu warned a price increase would put a "huge strain" on the global economy.
But OPEC members are worried about their own economies, many of which depend on oil selling for about $70 a barrel to survive.