Russia says it will send a permanent observer to the Organization of the Petroleum Exporting Countries, amid mounting concerns among producers about falling oil prices. Meanwhile OPEC ministers have decided to stick with current production levels. The OPEC ministers said Sunday they will put pressure on members producing more than the daily quota of 25 million barrels per day.
Speaking at the OPEC gathering in Vienna, Russian Deputy Prime Minister Igor Sechin told delegates Moscow wanted to send a permanent representative to the organization to improve cooperation,
"We have also discussed the issue of having a permanent representative of the Russian federation to the OPEC's secretariat," said Sechin. "We believe that with this initiative a sustainable and prompt exchange of views between the parties concerned could be established. We believe it to be very important in a time of the [global] crisis."
Due to the global financial crisis, oil prices have dropped from record highs of close to $150 per barrel last year, to just around $40.
Following the meeting OPEC oil ministers said they will stick to present output levels set in December. They also said they would pressure some members who have been overproducing.
Earlier, Russian Deputy Prime Minister Sechin again suggested cutting production.
"Joint endeavors significantly helped to stabilize the current oil prices at the current level at $40 per barrel," he said. "However, many experts are skeptical, saying that the achieved balance is short term. In particular this view is proved by the inventories in three key markets, West Europe, the U.S. and Japan. More importantly these numbers do not include the stocks in tankers, or infrastructure and sub-surface storage outside these regions. In that context decreasing oil supplies is a compulsory, but justified, measure."
Sechin said Russia would organize an international conference in Moscow this year to discuss the future of oil supplies.
While Sechin's presence at the meeting signaled a new era of cooperation, analysts cautioned that Russia prizes its independence and is unlikely to become a full OPEC member.
Despite the worldwide downturn, well-known oil analyst and trader Stephen Schork is convinced prices will dramatically rise by 2012. He accused U.S. President Barack Obama of not doing enough to help stabilize prices.
"You have a U.S. administration that is openly hostile to the development of domestic oil and gas reserves in the United States," said Stephen Schork. "Therefore, we will face in the same situation as in 2003 when we all came out of the [Internet] dot com recession of 2002 and 2003, and all this demand from all four corners of the world hit. Suddenly we found out we did not have enough supply and oil prices went from $20 to $150. Same situation here. When all demand comes back, prices will go up from $40 to at least $150 and probably $200 this time around."
President Obama says his administration is not against the oils industry, but wants to look to alternative energy sources as part of a plan to make the United States less dependent on foreign oil.
Analyst Schork says he does not expect oil prices to increase much this year. He said economic growth in countries such as China and India is unlikely to help OPEC's efforts to stabilize or increase prices.
"No they cannot," he said. "People looked at growth and people got excited because I think the economic growth from China came out at eight percent, which was thought to be a very high number. But we are talking about a country of [more than] a billion people. Same situation with India. You need growth at 10, 11 or 12 percent to keep those people employed, to keep those factories open."
That view is shared by OPEC, which has warned the global economic meltdown will depress oil consumption by at least one percent, this year.