OPEC will likely leave production quotas unchanged at its March 15 meeting in Vienna, for now accepting prices below the cartel's US$22 to US$28 a barrel target range, OPEC Secretary-General Ali Rodriguez said.
"We will maintain the same situation," Rodriguez said in an interview at the World Economic Forum. "Of course the situation is very dynamic, and maybe it's necessary that we have to make another decision" later, he said.
OPEC cut supply by 1.5 million barrels a day starting Jan. 1, in an effort to stem a drop in prices. The organization's fourth reduction in a year hasn't worked. A global economic slowdown has reduced demand, and prices have hovered near US$20 a barrel for the past three months.
"We are living in an extraordinary situation," Rodriguez said. "We have to fight some difficulties at this moment, and the main task is to avoid the collapse" of prices.
Because a cut in oil production might hurt recovery, OPEC is willing to maintain current production levels for now, he said, betting economies around the world will strengthen in the months to come.
"In the second quarter, if the situation worsens, maybe we will suffer some drop in prices. But in the third and fourth quarter the situation, we hope, will be much better than it is now," Rodriguez said.
That may take some time. Over the next month, "I believe the situation will be characterized by a modest increase in demand, between 500,000 to 600,000 barrels per day," he said. "The situation will be more or less like now."
Rodriguez and Russian Prime Minister Mikhail Kasyanov said OPEC is not in "conflict" with Russia over that country's plans to increase oil production.
Kasyanov told reporters at the WEF that "one of our objectives is to increase our presence in the world oil market."
Russia will announce a new oil policy in March, he said.
Until then, Russia is "coordinating" with OPEC by exchanging information. "We have no commitments or agreements," Kasyanov said. "We do believe in fair prices for both suppliers and consumers."
Russia had agreed to cut oil exports by 150,000 barrels a day, or 5 percent, to help OPEC prop up prices.
However, the world's No. 2 crude oil exporter won't restrict oil exports in February. Russia, whose exports rose about 5 percent last year, cut shipments in the last three months because of bad weather at oil ports, and not because of its pledge to OPEC, analysts said. While Kasyanov said Russia doesn't want to see "turmoil" in the oil market, "we are okay with US$18 a barrel or US$17 a barrel."
"We view the current situation as temporary," he said. "We are expecting the US and European economy to recover soon."
Although that's far below OPEC's target level, Rodriguez declined to criticize Russia's stance.
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