OPEC no longer an oil threat to West, IEA says
April 10, 2003, 2:14PM Reuters News Service
PARIS -- The head of the West's Energy watchdog said today that OPEC had shown through its sharp increase in oil output to cover for Iraq that the once-feared cartel is no longer a threat to rich nations.
Claude Mandil, executive director of the International Energy Agency, told Reuters that the Organization of the Petroleum Exporting Countries had demonstrated they share goals with oil importers such as the United States.
"The past months have proved that OPEC and consumers can share a lot of common goals," Mandil said in an interview.
"I don't feel OPEC is a threat. Thirty years ago it was considered so because oil was used as a weapon," he added.
Cartel leader Saudi Arabia, Iran and other OPEC members have lifted oil supplies sharply to cover for the shortfall from Iraq, and other export hitches in Venezuela and Nigeria, helping to cool a spike in prices.
OPEC's reference oil price has slumped from above $33 per barrel last month to below OPEC's target level of $25 this week.
The Paris-based agency was set up in the wake of the 1973 oil crisis, when Arab oil powers placed an embargo on the West. It oversees huge emergency stockpiles to be used in the case of another major supply disruption.
But cooperation between the two bodies has grown to such an extent that the IEA held back from releasing stocks when Iraqi exports stopped last month, trusting in OPEC's ability to maintain ample supplies.
OPEC ministers are now discussing a cut in supplies to stop prices falling further.
Mandil said OPEC and oil importers still disagreed over price, and said OPEC's $25 per barrel target was so high as to damage world economic growth. It also constituted a disincentive for companies to hold sufficient inventory levels, he said.
"Price is not a shared goal. I say this price is too high," Mandil said, declining to specify his ideal price.
"We believe the price should be the result of market forces, not market management," he said.