Opec Official Says Cartel has Regained Leadership

OPEC has regained its former role as price-setter in the oil market following last year’s price war, acting OPEC Secretary General Fadhil al-Chalabi said.

But he said he expects no short-term rise in demand for OPEC oil, adding that market stability will mean a continued sacrifice for the 13 OPEC member countries.

Al-Chalabi, speaking at a university here yesterday, said the December 1986 conference at which OPEC set an 18 dlr per barrel reference price gave the market a signal that the producers’ group was serious.

“It (OPEC) has no choice but to defend the price and this has restored its credibility,” said al-Chalabi, who is in Caracas for a meeting of the OPEC Fund Board of Governors.

Al-Chalabi said OPEC members have not exceeded the production quotas which took effect on February 1 and spot market prices are now near or above official OPEC prices.

Before the December conference OPEC faced a major and basic dilemma which led to the loss of its leadership role, he said. “The question was, what should OPEC do? Defend the price and risk losing its market share? Or defend its market share and let the price drop?” he asked.

“OPEC has chosen to stabilise the price. But the question is how long will it be willing to keep up this painful exercise?” he said.

Al-Chalabi said that despite OPEC’s success in shoring up prices and achieving discipline regarding quotas, he saw no quick end to restraint in production.

He also said he foresaw no increase in demand for OPEC oil because increased non-OPEC production, combined with conservation and the use of alternative energy sources, has caused changes in the market which will not easily be reversed.