updated 5/25/2009 2:12:31 PM ET 2009-05-25T18:12:31

A jump in oil prices to six-month highs despite anemic world demand is working against hardline OPEC members advocating even costlier crude ahead of a meeting of the 12-nation organization — and in favor of those wanting to keep production levels steady.

Formally, the meeting Thursday in Vienna could decide on a variety of options: cutting output levels, keeping them steady or raising them.

But with prices high — and demand stubbornly low thanks to the worldwide recession — oil ministers will likely shrug off pressure from price hawks Iran and Venezuela to reduce output in an attempt to boost prices and opt to keep present levels.

Simple figures appear to speak for keeping the status quo.

A barrel of crude now fetches more than $60 compared to levels near $30 just four months ago. And that spike has come despite continued anemic worldwide demand and gloomy future forecasts — OPEC’s May estimate sees demand for its crude declining by over 2 million barrels a day this year.

Instead of being powered by demand, oil prices have risen on the back of international stock markets. But stocks normally rise months ahead of actual growth in industrial production, reductions in unemployment rolls and other signs that a recession is over.

And the U.S. and other key economies are showing at the best only glimmers of hope instead of tangible improvement.

Thus, any move by the Organization of the Petroleum Exporting Nations to scale back output levels in an effort to prop up prices could backfire — both in terms of prolonging the recession and thereby depressing demand and by deepening perceptions that OPEC is bent on enriching itself at the cost of the rest of the world.

“The rationale behind increasing prices has been that prices have fallen low enough,” trader and analyst Stephen Schork said Monday, suggesting that OPEC would have little choice but to keep the status quo later this week. “But all we have seen is supply increase further and demand falling further.”

Cuts agreed on since September were meant to take a daily 4.2 million barrels off the market. But the 11 members that are under production quotas are still overshooting their joint daily target level of just under 25 million barrels by more than 800,000 barrels a day.

While 100 percent compliance with quotas is unlikely, even an additional 10 percent would take more than 400,000 barrels a day off markets, slicing into oversupply while reducing the price shock that an outright cut in existing quotas would cause.

Thursday’s meeting is thus likely to opt for nothing more drastic than renewing calls on members to slash overproduction and warning that OPEC is ready to call for an emergency meeting should prices slide suddenly.

We don’t expect any changes in output targets,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “The price is too high to cut.”

Both face-savers, such moves would be meant to show OPEC resolve without risking any action that could further delay an international economic uptick — even though they are unlikely to satisfy producers such as Iran, second only to the Saudi’s in terms of OPEC oil output. About 60 percent of Iran’s government budget comes from oil sales and the country last year drew up spending plans using $80 a barrel as a benchmark.

The stunning fall of crude from its lofty 2008 highs of $147 a barrel — and resulting Iranian economic hardship — is believed to be hurting President Mahmoud Ahmadinejad’s re-election chances. And oil minister Gholam Hossein Nozari said in March that his country was diverting funds from other sectors of its national budget to support its oil industry, its main revenue source.

Staking out Iran’s position ahead of Wednesday’s meeting, Ahmadinejad recently said $80 to $90 a barrel was “a suitable price for oil.” And Rafael Ramirez of Iranian oil ally Venezuela said his country favored oil prices at $70 a barrel — still about $10 above present levels.

OPEC might address their concerns later this year. Johannes Benigni, managing director of Vienna’s JBC Energy envisages “another OPEC cut to be on the cards, if not this month then at a later meeting this summer.”

“The massive imbalance between supply and demand needs to be removed and this is unlikely to happen at current production levels,” he said Monday.

But such a move is unlikely at the upcoming meeting Wednesday. Saudi Oil Minister Ali Naimi on Sunday said the ministers will likely “stay the course” — and what the Saudis say is usually informal policy for the rest of the organization.

“With the price of oil over $50, OPEC should be happy with that, and my guess is that until they can get better compliance, they’re not going to cut any further,” said London-based analyst John Hall.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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