For OPEC, Stability Is Paramount

Determined to keep oil flowing smoothly, Saudi Petroleum Minister Ali Naimi hints that falling prices are, at least for now, a minor concern

Saudi Petroleum Minister Ali Naimi is a man on the spot these days. He's responsible for maintaining adequate worldwide oil supplies, even if the U.S. military campaign against terrorism leads to a disruption. At the same time, he's seeing his carefully maintained price regime crumble amid the uncertainty spawned by the Sept. 11 terrorist attacks on the U.S.

Naimi is sticking to his routines, however. Before OPEC's meetings began in Vienna on Sept. 26, he went for his daily run and then, still wearing a white jogging suit, ate breakfast at his usual corner table in a hotel restaurant. He was typically gracious when his meal was interrupted by a reporter's questions.

Naimi bristled at the suggestion that Saudi Arabia was under pressure from the U.S., denying that coercion played any role. He conceded that there was a dialogue through Saudi Foreign Minister Saud al Faisal. "It's a two way dialogue," he said. "The purpose of the dialogue is to be fair and just and avoid being vengeful."

He also stressed that Saudi Arabia and OPEC were determined to maintain supplies. "If something happens tomorrow and a disruption takes place," he continued, "we will make up the shortage, whatever it is and whenever it is."


  What about a disruption? Naimi was noncommittal: "It depends on where the hits are. No one in the business is predicting strikes on oil facilities," he said, adding: "How would that help?"

Although prices have fallen sharply in recent days, Naimi was at pains to stress that those moves have been "due to short-term, unusual circumstances. Eventually, things will go back into balance." Adding that he expects continued volatility, he predicted: "You are going to see gyrations depending on the mood of the market."

Such talk seems to be aimed at bolstering the sagging price of oil, which has fallen below the $22-per-barrel average for OPEC crudes. That's an average the organization has pledged to defend. "The target price is $25," he said. (Which would mean about $28 for the U.S. benchmark, West Texas Intermediate.) "OPEC sets a direction to realize our objectives. The players in the market are mainly concerned about direction. If they believe in our actions, they are supportive of the price. If they don't believe, [the price falls]. That is when we move."


  It seems unlikely, however, that OPEC will be able to do much about the price for some time. Naimi conceded that "there is no question the events of Sept. 11 have caused some definite impact on the market." He added: "The market now believes there is plenty of supply, and that demand is going down as a result of these events."

While he declined to say so in as many words, the impression that price is no longer paramount was unavoidable. "You forget our other objective, which is market stability," Naimi said. In other words, making sure that supplies of oil are flowing smoothly is more important than the cost of a barrel of oil.

By Stanley Reed in Vienna

Edited by Douglas Harbrecht