OPEC Faults U.S. As Oil Hits New High

$100.00 bill with an oil rig and barrel
OPEC on Wednesday accused the U.S. of economic "mismanagement" it said is pushing oil prices to new record highs, rebuffing calls to boost output and laying the blame at the feet of the Bush administration.

Oil prices surged past $104 a barrel for the first time after the OPEC announcement and the release of a U.S. government report showing a surprise drop in crude oil stockpiles.

The 13-nation Organization of Petroleum Exporting Countries said it would maintain current production levels because crude supplies are plentiful and demand is expected to weaken in the second quarter.

OPEC President Chakib Khelil told reporters the global market is being affected by what he called "the mismanagement of the U.S. economy," and that America's problems were a key factor in the cartel's decision to hold off on any action.

"If the prices are high, definitely they are not due to a lack of crude. They are due to what's happening in the U.S.," Khelil said. "There is sufficient supply. There's plenty of oil there."

Khelil's comments came one day after President George Bush lashed out at the organization, warning Tuesday: "I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices."

White House spokesman Dana Perino said Wednesday that Mr. Bush was "disappointed" OPEC didn't do more to rein in prices, which some say are pushing the U.S. economy into recession.

Japan and other major industrialized nations have also urged OPEC - which supplies about 40 percent of world demand for crude - to bring more oil on the market to pull down prices.

OPEC, pointing to slackening demand in the second quarter, suggested that it will hold off to see what happens with supply and prices this spring.

"Why do we need to take any new measure if the health of the market that we follow for our policies is sound?" the pan-Arab newspaper Al Hayat quoted Saudi Oil Minister Ali Naimi as saying.

Naimi told reporters in Vienna that his country is pumping roughly 300,000 barrels a day over its quota and is selling every drop "day in, day out" - an upbeat assessment.

Analyst John Hall, of John Hall Associates in London, said OPEC probably should have added oil to the market as Bush had asked.

"But in this time of intense geopolitical tension, it would be difficult for Saudi (Arabia) or any other producer to acquiesce simply because President Bush had asked them to," he said. "In the short term, any true respite for the consumer is still out of reach."

Although OPEC opted not to intervene, it did pledge to maintain "constant vigilance" over the market.

Khelil said he and OPEC's secretary-general were authorized to call an extraordinary meeting or hold phone consultations "at any time, depending on the pressures on the market" - an apparent gesture to ease global economic jitters.

There had been some speculation that OPEC might actually cut production - a move that would drive prices even higher, along with profits for cartel members - but Khelil said a cut was not discussed at Wednesday's meeting. He said OPEC had no plans to meet again before its next scheduled conference in September.

Earlier in the week, price hawks Venezuela and Iran had indicated they planned to push for less production.

Khelil said crude stocks were well within their five-year average and the 13-nation group was not inclined to either boost or reduce its current output of about 32 million barrels a day.