Oil ministers from the Organization of Petroleum Exporting Countries spent five hours today pondering how to cope with a continuing glut in the world oil market but failed to agree on any new measures to halt the steady slide in prices.
The OPEC conference chairman, Indonesia's Subroto, said the 13 ministers discussed recommendations by a four-member market-monitoring committee to stick with OPEC's current strategy in the hope that cold weather in future months will bring a sharp rise in oil consumption.
The committee, headed by Mana Said Otaiba of the United Arab Emirates, urged OPEC to adhere scrupulously to quotas under a total production ceiling of 16 million barrels a day in order to prop up the official OPEC marker price of $29 a barrel.
The cartel cut back its production by 1.5 million barrels in late October, but industry analysts said that quota violations are so rampant that OPEC is now pumping close to 17 million barrels a day.
The ministers also agreed on the need to narrow the range in premiums paid for light oil over cheaper heavy crudes, and they hope to finalize a new price structure when they meet again Thursday.
But oil executives and industry analysts observing the meeting said OPEC will not be able to resolve the crisis in the world oil market until its oil ministers take one of two drastic steps: cut production further to remove a sustained oil surplus, or reduce the $29-a-barrel benchmark price to encourage more consumption.
OPEC members have balked at both tactics, because they are worried that either course will lead to steep losses in their income as well as diminished control over the world oil market.
A senior executive of a Houston-based oil firm said OPEC would have to slash its output another 4 million barrels a day, down to a ceiling of 13 million barrels, at least temporarily, if it hoped to soak up a glut exacerbated by mild winter weather.
Saudi Arabia's Ahmed Zaki Yamani contends that the major American oil companies are worsening OPEC's plight by drawing down stocks as much as 3 million barrels a day in a concerted effort to push prices down.
But industry analysts insisted that stocks are in good supply and that no more than 1 million barrels a day are being withdrawn from reserves.
They stressed that OPEC's problems are caused more by its own lack of discipline, with member states breaking quotas and cheating on prices by offering credit and other forms of discounts in desperate bids to sell more oil.
"It reminds me of the snake that bit itself," a top American oil executive remarked.
Algeria's oil minister, Belkacem Nabi, pleaded with his colleagues to undertake more severe cuts in output to shore up the market, delegates said. But his position was fiercely rebutted by other ministers who believe lower quotas would only encourage non-OPEC producers to pick up the slack and cause further erosion in the cartel's share of the market.
Non-OPEC oil producers -- such as Britain, Norway, Mexico, Egypt and the Soviet Union -- have increased their output this year by 1 million barrels a day. They are expected to expand production another 600,000 barrels a day next year, according to oil industry projections.
OPEC members also have resisted proposals suggesting substantial price cuts to lure more buyers, because they fear that western governments would take advantage of such action by imposing higher taxes on gasoline and other petroleum products.
The net result, OPEC delegates said, would not be lower prices for consumers but rather a straight transfer of wealth from oil producers to governments in consumer countries.
Besides sacrificing income through possible price cuts, OPEC members are worried about unleashing the psychological momentum of a price war that could drive prices down $10 a barrel or more.
Subroto, in a speech opening the conference today, declared that OPEC was still in a stronger position than many non-OPEC producers to survive a collapse in the oil market.