VIENNA — OPEC oil ministers Thursday avoided the temptation to cut crude production and trample on the seedlings of economic recovery. Instead, they bet on prices floating higher as the recession eases and demand for oil picks up.
With the world oversupplied with oil, the 12-nation oil-producing cartel could have opted to tighten the spigots — an option it has often exercised to raise prices in past times of anemic demand.
A statement by the Organization of the Petroleum Exporting Countries announcing the decision to keep current production quotas said worldwide oil inventories at the end of April were at a 20-year high.
But with the world still in the grip of recession, cutting back production could have backfired by spiking prices and delaying any economic uptick. That, in turn, could have directly hurt OPEC by further reducing the world’s capacity to pay for costly crude and leading to an even greater overhang in supplies.
The oil ministers instead opted to sit back and wait, in a decision driven by the belief that the U.S. — the world’s largest oil consumer — is gradually emerging from a severe recession and that demand there will support oil prices.
