IEA: Opec 'should keep output targets unchanged'

17 September 2009

Opec should not seek to cut oil production in an effort to raise prices, even though the market appear to be stable at present, an expert has claimed.

Richard Jones, deputy executive director of the International Energy Agency, told Reuters that the supply and demand for the fuel is currently well balanced.

Although a fast economic recovery could see the market begin to tighten in the next two or three years, he said a slower turnaround would have little impact on prices.

However, Mr Jones warned that this should not prompt Opec to lower its output targets, claiming it is "important" to have the extra capacity in place.

"If they cut production, particularly if it was designed to raise the price, it could have a negative impact on economic output," he said.

The producer group opted to leave production targets unchanged at its latest meeting earlier this month and is not scheduled to meet again until December.

Oil prices were boosted on Wednesday as US government data showed a 4.7 million-barrel draw in crude stockpiles, raising hopes that demand for the fuel is beginning to pick up.

US crude rose $1.58 (€1.07) to end the day's trading at $72.51, while London Brent settled up $1.68 at $71.54.

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