updated 9/10/2008 8:27:15 PM ET 2008-09-11T00:27:15

The just-ended OPEC meeting was about more than what a barrel of oil can fetch on the open market as the global economic picture grows dim.

OPEC heavyweight Saudi Arabia gave a nod, at least symbolically, to fellow member states that have grown increasingly uneasy about the rapid decline in crude prices. The Saudis attempted to placate rival Iran, and laid the groundwork for a potential new alliance with Russia, the world's second largest oil producer.

But OPEC's announcement that it would cut output by more than 500,000 barrels by sticking closer to quotas did little to change what most consumers care most about — the cost of filling up a car with gas or heating a home over the winter.

Benchmark oil prices were on a downward course Wednesday, shedding 68 cents to fetch $102.58 a barrel on the New York Mercantile Exchange. Brent crude briefly touched $98.10.

Behind the scenes, the 13-nation energy cartel juggled the conflicting interests of Saudi Arabia and Iran — and brought oil and gas giant Russia closer into the fold by agreeing to sign a cooperation agreement with the Kremlin.

OPEC's continued ability to present a common front, while extending a hand to Russia, is potentially bad news for major crude consumers including the U.S. and Europe. There may be even less wiggle room in trying to find the lowest bidder to meet their energy needs at a time when the summer's record oil prices close to $150 are a still vivid memory.

But it may also have been a signal that record oil prices may, at least for the near future, spoiled the global appetite for crude.

"The ministers appear genuinely concerned that the bottom is falling out of global demand and that once depleted stocks are rebounding with a vengeance," said Antoine Halff, an energy analyst with Newedge USA. "Their panic is testament to how soft the market has become. It is likely to grow even softer."

Saudi Arabia's clout is key for Washington. President Bush visited Riyadh twice this year to push an oil production increase. The Saudis answered by ramping up production by about 500,000 barrels a day.

OPEC's decision Wednesday to cut output by 520,000 barrels effectively canceled even that relatively modest nod to U.S. requests, leaving some talking about a Saudi defeat and a victory for Iran, which has sought higher oil prices through production cuts.

Not so, says analyst and trader Stephen Schork, who was monitoring the meeting in Vienna.

"I wouldn't say the Saudis backed down," he said. "I'd say it was a respectful nod to the other members of the group."

In reality, the Saudis are the tail that wags the dog at OPEC, accounting for nearly a third of the group's production of around 30 million barrels a day. They have often gotten their way at OPEC ministerial meeting and a strong push by them in Vienna to keep the status quo on output would probably have succeeded.

But strong U.S.-Saudi ties take second place when it comes to setting common OPEC policy.

The Saudis compromised — and so, finally, did Iran. OPEC's No.2 producer came into the meeting demanding stronger action to stem falling oil prices only to accept paring back only a bit in a bid to eliminate output above the group's agreed production limit.

Predictably, while the middle ground might have pleased OPEC, it found few fans at the White House.

"We certainly disagree with it," White House press secretary Dana Perino said. "We would like to see more oil on the market not less."

Addressing Bush's pleas to oil-producing nations to increase production, Perino sought to diminish the impression that the president's personal requests were being ignored, saying that "not just the United States but many other countries ... have asked OPEC to make sure that those oil markets are well-supplied."

Wednesday fall in oil prices also reflected little concern over the Russian-OPEC decision to cozy up to each other through an agreement that is to be worked out over the next few months, in part during a visit to Moscow next month by OPEC Secretary General Abdalla Salem El-Badri.

"I don't think our cooperation will affect the consumer at all," said El-Badri. And Cornelia Meyer, who has helped negotiate several energy deals between Russia and Western companies said that while "it's important that Russia and OPEC speak ... the understandings are very loose.

"Russia does not want to be in OPEC because it means adhering to quotas which is not what Russia wants," she said. "Russia does not want to comply with anyone's wishes but the Kremlin's."

Still, the closer Russia-OPEC ties do raise some potential concerns.

With Russia producing around 11 percent of the world's oil, any tight coordination with OPEC on prices and supplies would affect more than half of what's available on the market.

The EU buys 30 percent of the oil it imports from Russia and another 45 percent from the Organization of Petroleum Exporting Countries. About 40 percent of the EU's imported natural gas comes from Russia and that is forecast to rise to 60 percent by 2030.

Such dependency has forced the EU to temper its response to the Georgia crisis.

EU leaders warned Russia last month that talks on a wide-ranging political and economic agreement would be postponed unless Russian troops pull back from positions in Georgia.

But the EU's dependence on Russian oil and natural gas deterred the EU from stronger sanctions.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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