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Opec to cut production to maintain high oil prices
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posted January 18, 2001 09:38
VIENNA 17TH Jan (IPS) As the eleven members Organisation of Petroleum Exporting Countries (OPEC) registered a record 261 US $ billions revenues for the year 2000, a 68 per cent increase compared to 1999, the organisation’s ministers are expected to lower their out put by at least one million barrels per day (bpd) in order to keep prices around or above 25 dollars per barrels, when they meet today Wednesday in the Austrian Capital of Vienna.
"This is the highest level OPEC ever reached in the past 20 years", said the Paris-based "Petrostrategies" weekly in its latest issue published Monday.
Crude oil for February rose Monday by 43 cents to 26.18 US $ dollars per barrel on the International Petroleum Exchange in London on expectation that OPEC would cut production for the first time in the past year between
The United States and the European Union warned the organisation against any "sharp and unconsidered" production cut.
But with stocks still low and under reconstitution and Iraqi exports expected to be disrupted for some time, the 11member organisation has rejected the joint US-EU calls to maintain output, arguing that there was an over supply in the market.
Speaking to reporters in Paris on Friday, EU Energy Commissioner Loyola de Palacio of Spain and and the US Energy secretary Bill Richardson expressed satisfaction at the present situation of oil markets and lauded
Last year, OPEC increased its total output by almost 4 millions barrels per day (bpd) to fight an unprecedented increase in oil prices that reached up to 37 US $.
"We are here to stabilise the market", said Saudi Oil minister Ali Al Na’imi on his arrival in Vienna, emphsising that the policy of the Organisation was to "prevent a precipitated increase or decrease in oil
Mr. al Na’imi confirmed that the cut back could stand "very probably" at around 1.5 million bpd, to take effect from February.
"Because the market is still volatile, producing nations should be extremely careful about cutting production and should consult with the countries that will feel the greatest impact", Ms. de Palacio observed at
"It is true that with spring approaching, there will be a surplus and it is natural that in their next meeting, OPEC minister consider reduction of their production, but right now, all consuming nations, particularly the US and Europeans are building their stocks, but any unconsidered reduction would harm the world economy", she said.
However, Commissioner de Palacio said "precipitous actions to severely decrease world production levels at a time when inventories are building will increase volatility and raise prices, hurting both producer and consumer countries and developing world".
"The Commissioner and the Secretary agreed that the global oil market has begun to stabilise and that would-wide crude oil and product stocks are starting to build, in large part because oil producing nations increased oil production four times last year for a total of more than 4 million bpd", a joint statement noted.
"The Commissioner and the Secretary praised the efforts of producing, consuming and developing countries to co-operate to reduce volatility in the market. They committed to continue their joint efforts to further
As both Ms. de Palacio and Mr. Richardson emphsised on the importance of maintaining "constructive dialogue" between producers and consumers, former Saudi Oil Minister Sheikh Zaki Yamani also warned OPEC against going ahead with its expected 1.5 million bpd cut back.
"If I were at the OPEC meeting I would say don't take action until we see what is the Iraqi situation, then take action accordingly", Mr. Yamani, who is the Chairman of the London-based Centre for Global Energy Studies (CGES) told the prestigious Royal Institute of International Affairs in London on Friday, observing that the cut would be too much and push prices back up towards US$ 36 per barrel "unless Iraq starts again to export oil".
The London-based CGES said high oil prices in 2000 had already undermined growth prospects for this year and that the outlook could be "even worse" if oil prices do not fall.
It expected that global oil demand would rise by 1.3 m bpd in 2001 as economic growth rates fall, but warned that the increase could be even lower if OPEC's pursuit of high prices undermines the recovery.
Mr Ali Rodriguez, the Venezuelan General secretary of the OPEC observed that a slow path world economy would mean less demand for oil, confirmed this view.
To prevent an important cut back in OPEC production, the outgoing Richardson travelled to all major Persian Gulf producers, including Saudi Arabia, world largest producer and exporter, Kuwait, Qatar and United Arab Emirates. "During the trip, I made small progress but failed to secure firm engagement from the producers", Mr. Richardson acknowledged Monday in Kuwait.
But according to Iranians, the expected moves by OPEC to slash oil output by around 1.5 million barrels per day "should benefit everyone".
"The output cut plan would be beneficial for both oil producers and consumers", Iranian Deputy Foreign Minister Mohsen Aminzadeh told Agence France Presse (AFP) after talks with his Indonesian counterpart Alwi Shihab in Jakarta.
"The stabilisation of oil prices between 23-28 dollars a barrel is a reasonable one which will be accepted by oil consuming countries", Aminzadeh said.
Algerian Energy and Mining minister Chakil Khalil, who is also OPEC’s Chairman said the expected cuts would pose no threat to global economic growth.
All times are PT (US)
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