OPEC will wait for the US-led military campaign against Afghanistan to unfold before taking any decision to cut production as a means of propping up the oil price.
Yesterday, at the organisation's Vienna headquarters, Mr Ali Rodriguez, OPEC's secretary-general, said: "We must wait and see what happens in the coming days" before taking a decision. An oil ministry official from OPEC's largest producer, Saudi Arabia, echoed the same wait-and-see line.
In normal circumstances, the 11-nation oil producers' cartel would almost certainly reduce output. By its own agreed market mechanism, it is supposed to cut output by 500,000 barrels a day or more if the basket price for its crude stays below $22 (€23.97) a barrel for 10 days. This condition was surpassed on Friday, according to OPEC's official figures.
Analysts said OPEC appeared to want to see an end to the military campaign in Afghanistan, or at least to wait for confirmation that it really would be limited to that central Asian state, before taking action.
Mr Leo Drollas, the deputy director of the Centre for Global Energy Studies in London, said the cartel could afford to let the price of its crude oils fall to about $18 a barrel before being forced to take action to limit output. "This is a reasonable price given the state of the economy, and Opec realises it has to roll with the punches this time. However, if the price stayed this low into next year it could present problems for some OPEC members," he added.
The oil market yesterday remained unmoved by the military strikes. In afternoon trading in London the price of benchmark Brent crude for November delivery had slipped four cents to $21.59.
US attacks on Afghanistan failed to unsettle the dollar, which fell modestly in Asian trading but quickly recouped its losses as nerves settled in early London trading.
Early gains by the Swiss franc which has been the most popular safe haven currency since September 11th were also swiftly erased. The subdued response partly reflected thin trading and US currency closed almost unchanged against the euro, at $0.9177.
