OPEC majority has not ruled out oil supply increase
A majority of OPEC member states have not ruled out further production increases before their next meeting on January 17, Saudi Arabia's oil minister said in an interview to be published Monday.
"The majority have not ruled out that an increment could take place before the next meeting," in Vienna, Ali al-Nuaimi told the Middle East Economic Survey (MEES).
"But it would have to be justified ... But I do want to repeat that there has not been a conscious decision that nothing is going to be done even if prices get out of hand or go haywire for any duration of time."
He was referring to the cartel's meeting on November 12-13 when ministers agreed not to put any new supplies onto the market, despite high prices stuck well over $30 a barrel.
"The main concern is this: four supply increments have been authorized and put into the market" this year, Nuaimi told the specialist newsletter, which released the interview at an international energy forum in Riyadh.
”Meanwhile information is emerging to the effect that supply is going to be significantly ahead of demand in 2001 - and we are not very far from 2001.
"And having just released a supply increment of 500,000 barrels per day (bpd) everybody felt that it would not really be prudent to commit automatically for an output increase."
He said a majority believed there was "plenty of crude on the market" after the cartel boosted production by 3.7 million bpd this year as the markets roared and consumer nations demanded more and more supplies.
Saudi Arabia, the world's leading exporter, does not share fears some producers have voiced of a price crash in 2001 from oversupply.
However Nuaimi added that the January meeting would be "the time we have to come to grips with a decision as to whether a cut in production is necessary or not.
"That again is the reason for not putting any additional crude supply onto the market now because then you risk creating a swell and consequently the need for a bigger cutback and then you get into these market swings which are what we are trying to avoid."
MEES said all the signs were that "price volatility will last throughout the winter before prices fall away in the spring."
The Nicosia-based specialist weekly noted that while the markets were well supplied, fears of Iraqi supply disruptions and US heating oil stocks were keeping oil prices high.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)