LONDON (AP) — Oil prices plunged Monday to levels unseen in nearly four years, as traders decided OPEC won’t try any quick fixes for the depressed market.
The Organization of Petroleum Exporting Countries was considering holding an emergency meeting next week, but Saudi Arabia’s oil minister, Ali Naimi, seems to have shot down the idea. He says he won’t cut the kingdom’s production only to lose market share to other OPEC members who are pumping more than they agreed.
The main question now hanging over the market: How low will the price of oil have to go before one of the two protagonists in the latest internal OPEC squabble — Saudi Arabia or Venezuela — will blink?
Brent crude oil to be delivered in April fell 47 cents a barrel, to $13.12, late Monday afternoon on the International Petroleum Exchange in London.
Light sweet crude oil to be delivered in April was off 48 cents at $14.43 a barrel on the New York Mercantile Exchange. On Friday, the spot month contract in New York had plunged below $15 per barrel for the first time since April 1994.
Oil prices have been sinking since OPEC decided in November to increase its stated output ceiling by 10 percent — just as world demand for crude was slowing due to the Asian economic crisis. A relatively mild winter in parts of the United States also has reduced demand for home heating oil.
In the past, Saudi Arabia has acted as a “swing producer” within OPEC, adjusting its own massive production to stabilize often volatile global markets.
But Naimi told the state-run Saudi press agency Sunday that he will not do this “only to find out that other countries, especially those who do not adhere to their quotas, flood the market, undermine prices and take our valuable customers.”
Saudi Arabia, he said, has “abandoned once and for all the role of swing producer.”
Venezuela is by far the biggest quota-buster in OPEC, but oil minister Erwin Arrieta said last week that his country won’t cut production by even one barrel.
Although several of the group’s smaller players are clamoring for cutbacks, they may have to wait to see whether the Saudis or the Venezuelans back down first in the face of sharply lower revenues that will prove devastating to all the oil producers.