Saudis call for stable oil prices as markets hit new highs
Saudi Crown Prince Abdullah, ahead of a meeting Wednesday with US President Bill Clinton, called for stable oil prices as Western pressure mounted to lower prices from their current 10-year highs.
"Saudi Arabia is pursuing a fair oil policy aimed at guaranteeing the needs of oil-consuming countries," Prince Abdullah told a group of Saudi-US businessmen in New York following western appeals for production increases to bring prices down.
"Oil-producing countries must assume their responsibilities with a view of bringing fairness for everyone," said Prince Abdullah, who was to meet Clinton on the sidelines of the UN Millennium summit later Wednesday.
US National Security Advisor Samuel Berger said Tuesday the two men will "talk about the energy situation and the mutual interest in a fair balance between production and demand that creates stability."
"The time has come to open dialogue between producers and consumers to reach an agreement and bring about the stability of this strategic product in the interest of all parties," said Prince Abdullah at a dinner in New York, according to his entourage.
Saudi Arabia, a strong strategic partner of the United States, has been calling for several months for a production hike to lower prices, and has recently said it was favorable to an increase in OPEC output in a bid to stabilize prices.
EU Energy Commissioner Loyola de Palacio joined in calls Wednesday to boost output, saying the cartel must undertake a "substantial increase" in oil production to avoid undermining the world economy with high-priced crude.
Oil prices in London soared again Wednesday to 10-year highs, North Sea Brent reference crude for October delivery touching 33.50 dollars a barrel, as analysts predicted that promises to pump more crude will not calm overheated markets.
The 11-member cartel is to meet in Vienna on September 10 to decide whether to hike output or not.
The kingdom, the largest oil producer in the world, has reserves estimated at 261 billion barrels and will play a critical role in any OPEC decision because it is one of the few members of the cartel that enjoys spare capacity.
"Saudi Arabia wants stability in the price of oil, its main source of income, but it is also aware that if the price is maintained at a high level, it could encourage, in the long term, production in countries outside OPEC," one analyst in Riyad said.
Nevertheless, Saudi Arabia is benefitting from the high prices.
According to a report published Monday by the Saudi American Bank, the kingdom's leading bank, Saudi Arabia was enjoying "its strongest year for oil revenues since the peak of the oil boom in 1981."
But the bank also warned that "oil revenues, even at current high levels, are no longer adequate to sustain growth and job creation."
The kingdom is also keen to preserve its relations with fellow Gulf producers, notably Iran, the second largest producer in the cartel that has expressed its opposition to any production hike.
Iran stuck its neck out in March, resisting US pressure to agree to hike production, but came back into the fold a few months later. – (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)