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CNN Live Event/Special

America's New War: OPEC Not To Change Policy

Aired September 26, 2001 - 06:47   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: The OPEC ministers are meeting in London right now, and the word we're getting is that they're not talking about making major changes in the world's oil supply.

Let's check in now with Richard Quest -- he's in London. He's got the very latest for us on this OPEC meeting -- hello, Richard.

RICHARD QUEST, CNN CORRESPONDENT: Oh, hello, Leon.

Now -- yes, indeed. The meeting, which takes place at the moment. The ministers are gathering in Vienna, and basically what they have to do is decide whether they're going to raise or cut production, because of the way oil prices have fallen so very sharply in recent weeks.

Remember, just on Monday, we saw the largest, single fall in the price of a barrel in 10 years.

Leon, just bear with me a second. I want to just give you a bit of background, just for a second or two, about OPEC -- the Organization of Petroleum Exporting Countries. There are 11 members of OPEC, and basically they're from the biggest, Saudi Arabia, to the smallest countries, Qatar, Venezuela, UAE -- United Arab Emirates. You name the big Middle East countries; they're part of OPEC. And together, they form 40 percent of the world's oil supply.

So what they decide on how they decide to up and lower production makes a great impact.

What OPEC has said is it wants to keep the price of oil between this price: $22 and $28 a barrel -- ideally, $25 a barrel. And now, of course, what we're seeing on the International Petroleum Exchange is as the threat of a recession comes along, the prospect of a general slowdown -- global recession even, we're now seeing the current price: $20.51. This, as far as OPEC is concerned, is very bad news.

Of course, for the motoring and traveling public, it's good news indeed. It means cheaper prices at the pump. We have seen some companies, like British Petroleum, already cut the price of gasoline, Leon. That's what's worrying OPEC at that meeting in Vienna -- Leon.

HARRIS: Well, Richard, you mentioned the recession and the worldwide slowdown economically here, but are you hearing anything about any concerns among the OPEC members there about this new war against terrorism? Do they suspect anything there may have an impact on oil prices?

QUEST: Oil prices will move if there's a threat to the supply. That was the whole point about the Gulf War. That's why we saw such enormous moves in the price of oil. There was a threat to Kuwait, to Saudi Arabia. In this particular case, Afghanistan -- possibility of attacks there doesn't threaten supply. So to some extent, it's not the same dynamics.

There is one important point to remember, and that is that most of these Middle Eastern countries have large Muslim populations. So if there is disruption, if there is civil unrest, if there is riots or anarchy in any of these countries, that, of course, plays into it.

You know, governments in Saudi Arabia may break off relations with the Taliban, and other governments may support the U.S. coalition, but the Muslims within these countries may, indeed, cause more problems within that.

So it's all a question of supply, Leon. Keep your eye on that. When supplies are at risk, that's when prices rocket.

HARRIS: Thanks. That's Econ 101 with Richard Quest. Thanks a lot -- we'll talk with you down the road, pal -- take care.

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