Oil ministers from the eleven OPEC countries have extended a self-imposed freeze on crude oil output. The production curb and a threat of war against Iraq have pushed up the price for oil.
Rising oil prices put a smile on the face of Kuwait's Oil Minister Sheikh Ahmad Faahad Al-Ahmad Al-Sabah
In times of war or looming conflict, many goods get more expensive, especially oil, and this month the threat of a US attack against Iraq has brought about a sharp increase in price for crude.
That's good news for the members of the Organization of the Petroleum Exporting Countries (OPEC), and since oil prices are developing favorably for the organization, member countries' oil ministers have now decided to stick to a policy adopted at the end of last year.
At a meeting in Vienna on Friday, OPEC extend a self-imposed curb on oil production for three more months.
When global economic slowdown came at the end of last year, OPEC limited its output to keep oil prices stable. In December, OPEC decided it would not produce more than 21.7 million barrels per day. One barrel equals 159 liters, or 42 US gallons.
In March of this year, the price for a barrel of crude oil increased substantially. This week, it crossed the threshold figure of 25 euro (22 dollars) per barrel for the first time in six months. According to Algeria's Oil Minister Chakib Khelil, OPEC considers a target range of 25 to 32 euro (22 to 28 dollars) reasonable.
Friday's decision no surprise
OPEC sees the increase as a success of its policy curbing production. So Friday's decision to leave things as they are was widely expected.
Even before Friday's OPEC meeting began in Vienna, some participants had already indicated that the organization saw no need to alter its policies. Iranian and Venezuelan oil ministers joined their colleague from the United Arab Emirates in pushing this point before the Vienna meeting opened.
Persuading non-OPEC countries
Despite the considerable influence OPEC wields, its eleven countries account only for one third of the world's oil production. So the organization attached great importance to persuading independent producers like Russia, Mexico, Norway and Oman to join its supply management campaign last year.
Meanwhile, the organization has been successful in convincing Mexico, Norway and Oman to stay on board for another three months. It's now working on Russia, the world's second biggest oil exporter.
On Friday, Russia, also indicated that it might extend its curbs on crude oil production. Oleg Gordejew, a Russian delegate at the Vienna conference said the Moscow government would decide on an extension of the freeze next week.
But an official of Russia's second largest oil producer YUKOS on Thursday indicated that Russian oil companies weren't worried about such limitations. Ray Leonard, director of new projects at YUKOS said the Russian government would allow oil companies to hike production - regardless of any OPEC deal.
"While they may not say no to OPEC right to their face, they're just going to let the companies move forward," Leonard told Reuters news agency.
Next OPEC decision due in June
OPEC members are planning to meet again in mid-June. They will then determine their policy for the second half of the year depending on how the global economy has developed. If there is an economic recovery, demand for OPEC oil will also rise.
"We hope to increase production in the third quarter," said Iranian Oil Minister Bijan Zanganeh.