DUBAI, SAUDI ARABIA - Saudi Arabia and other core Gulf OPEC producers will not seek to push oil prices beyond $50 US a barrel in the short-term, to help nurse the global economy out of recession.

If oil, now near $50, does not drop, Saudi Arabia appears unlikely to seek another output cut at OPEC’s meeting in May even though prices are a long way short of Riyadh’s stated $75 price target.

“For OPEC, the penny has dropped on the economy — it is still fragile and may not have hit bottom yet,” said Bill Farren-Price, energy analyst at Medley Global Advisors.

“Their longer-term price ambitions around $75 a barrel have to be deferred for the time being. There appears to be a co-ordinated message from Gulf producers that $50 is good for now.”

Saudi Arabia, a member of the G-20 leading world economies, is keen to be seen helping and not hindering measures to shore up the global economy.

Saudi Arabia is the only OPEC member and the only Arab state in the G-20. It sees itself as the leading political and economic power in the Arab world and wants to play its part at the table of global leaders.

“I think they are more obsessed with G-20 than they are by OPEC,” said Ed Morse, energy analyst at LCM Commodities.

The world’s top oil exporter, Saudi sees $75 a barrel as a fair price that would encourage production projects worldwide to help meet future fuel demand growth.

But the kingdom and fellow Gulf producers Kuwait, the United Arab Emirates and Qatar want to see economic growth drive the price higher, rather than further cuts in output.

Oil finished above $52 a barrel for U.S. crude Thursday, having averaged $43.50 in the year to date, falling as low as $32.40 in December. A Reuters poll forecasts an annual average this year of $49.73.

Another round of supply curbs by the Organization of Petroleum Exporting Countries might lift prices. But if higher energy costs were to delay economic recovery then OPEC would have to wait longer to see the fuel demand growth needed to sustain higher prices.

“Prices are at $50 now, that’s good,” a senior Gulf OPEC delegate said earlier this week. Higher seasonal demand and better compliance from OPEC members with existing cuts should lead to a firmer market in the second half of the year, he said.

Since September, OPEC has announced supply curbs of 4.2 million barrels a day, 14 per cent of its output, and implemented actual cuts of about 3.3 million bpd. It kept output targets unchanged in March to focus on full compliance with the existing reductions.

Having shouldered the lion’s share of OPEC’s cuts to prop up prices, Gulf OPEC members would probably need to do so again if the cartel curbed output further. Saudi Arabia has cut below its OPEC target, compensating in part for some non-Gulf members who have done little.

“It is unlikely the Gulf countries will want to take on much more of this burden on their own, considering the state of the world economy,” said Morse. “I think the incentive to cut further is pretty low among most OPEC countries.”

“I think that Saudi is basically showing clear signs of defending a price around $40,” said John Sfakianakis, chief economist at SABB bank in Riyadh.

The International Monetary Fund reckons the $100 drop in oil prices from a peak of over $147 a barrel in July 2008 was equivalent to a stimulus of about 1.5 per cent of global GDP.

But that stimulus comes with a big risk. At around $50, investors are pulling back from high cost energy projects needed to meet future demand growth, and even some in OPEC are feeling the pinch.

“We cannot really invest at current oil prices,” OPEC secretary-general Abdullah al-Badri said Thursday. “Maybe we can live this year. The cost of adding new capacity is still high.”

Saudi Oil Minister Ali al-Naimi said last month his country would continue investing through the downturn, but he warned of a potentially catastrophic future supply crunch as others cut back.

Gulf countries accumulated savings of hundreds of billions of dollars during oil’s six-year rally to last July’s record and could easily live with $50 oil for a couple of years.

“They definitely have sufficient reserves to finance any budget deficits at $50,” said Raja Kiwan, energy analyst at consultancy PFC Energy.

“They can run with it for a couple of years at least. They are keeping an eye on the longer term and they don’t want to make a bad economic situation worse.”