OPEC was powerless to prevent a collapse on world petroleum markets yesterday that appears to spell the end of a two-year oil price boom.
Hands tied by political loyalties after the September 11th suicide attacks in the US, OPEC's big Gulf Arab producers now face the harsh realities of an economic downturn that is stemming demand for their exports.
Oil ministers, arriving for a meeting in OPEC headquarters in Vienna tomorrow, watched helpless as crude slumped 13 per cent, the biggest one-day fall since the Gulf crisis 10 years ago. London Brent last traded $3.43 a barrel lower at $22.01. US light crude lost $3.96, 15 per cent, to $22.00.
US demands for co-operation following the assaults make it almost impossible for OPEC's most influential member, Saudi Arabia, to support any early action to prop up prices. Riyadh, the biggest US oil supplier, has pledged full support to help provide intelligence to Washington on Saudi-born Osama bin Laden, suspected mastermind behind the attacks.
"It's a very delicate time at the moment but we're all working to maintain price stability," said OPEC secretary-general Mr Ali Rodriguez. "The signs for the global economy are not at all encouraging." And dealers appear to have lost confidence in OPEC's ability to defend its central $25 a barrel price target.
"The weight of economic decline is just too great," said Mr Gary Ross of New York's PIRA Energy consultancy.
"Sentiment has collapsed and the market is testing OPEC. Does it have any more bullets left in the gun? I doubt it."
Kuwait, a Gulf Arab state close to Washington, signalled its willingness to assist in US efforts to bolster its failing economy with lower oil prices.
"We understand the situation with the world economy and we will be supportive," said Kuwaiti Oil Minister Adel al-Subaih on his arrival in Vienna.
He said Kuwait would be comfortable with prices for a basket of OPEC crudes at $22-$25 a barrel - at the bottom end of the group's long-standing target range of $22-$28.
