First OPEC/IMF High-Level Joint Meeting

No 9/2006
Vienna, Austria
22 May 2006

OPEC and the International Monetary Fund (IMF) held their first high-level joint meeting in Vienna, Austria, today (22 May).

The purpose was to explore how the two intergovernmental bodies could work together more closely in the future at the most senior level to enhance order and stability in the international oil market, in support of sound world economic growth.

Mr Mohammed Barkindo, Acting for the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), met the IMF delegation headed by its Managing Director, Mr Rodrigo de Rato.

The hosts made presentations on OPEC and the world oil market and on the long-term oil outlook up to 2025, as well as on the promotion of cooperation and transparency of oil data. The Organization emphasised its longstanding commitment to market order and stability, with secure supply, reasonable prices and fair returns to investors. It said it had been acting on two fronts, in the light of the market volatility and rising prices of the past two years, by increasing supply as and when necessary and by accelerating plans to introduce more production capacity. Spare capacity would be around ten per cent by the end of the year, and past experience had shown this to be a comfortable level for the market; the market would thus remain well-supplied for years to come. OPEC had shouldered the burden of maintaining spare capacity, which itself is a very expensive process.

Turning to the longer term, OPEC said that the world had sufficient oil resources to meet the forecast continued rises in demand, especially from the emerging economies, and that most of the world’s proven crude oil reserves were located in OPEC Member Countries. However, sound investment strategies required clear indications of future demand, and thus every effort should be made by consuming countries to minimise the impact of policy-induced demand uncertainties.

The two sides agreed on the critical role that energy plays in support of world economic growth, and Mr de Rato expressed his appreciation to OPEC for its contribution in this respect. He added that the two intergovernmental bodies had a shared interest in ensuring that the market remained well-supplied with oil, so as to meet the continued rises in demand and support healthy world economic growth. He said that globalisation had come to stay and that it would be in the best interests of the world economy for OPEC and the IMF to collaborate. He noted that the IMF had a new mandate to focus on cooperation as a means of solving global imbalances, while recognising at the same time that macroeconomic imbalances could not be solved overnight. Mr de Rato welcomed OPEC’s longstanding commitment to dialogue and commended it, in particular, for its role in the Joint Oil Data Initiative, which aims at ensuring transparency in oil data, under the auspices of the specialist producer-consumer dialogue body, the International Energy Forum. He expressed the view that investments were globalised in a global economy and that oil should benefit from the global investment pool.

With regard to future collaboration, Mr de Rato has accepted an invitation to participate in the Third OPEC International Seminar, entitled “OPEC in a new energy era: challenges and opportunities”, to be held in Vienna on 12–13 September 2006, and similar joint actions are expected at other appropriate gatherings.