Saudi Arabia Pledges more OPEC Output if 800,000 Extra Barrels not Enough
Saudi Arabia, the world's biggest oil producer and the kingpin of OPEC, said on Monday that the 11-member cartel could increase output again if the latest 800,000-barrel boost does not calm markets.
Saudi Oil Minister Ali al-Nuaimi was speaking as the Organization of Petroleum Exporting Countries (OPEC) ministers gathered again to finish off business, after agreeing the production increase on Sunday.
"We can trigger the mechanism at any time," he told reporters, referring to a price-band mechanism under which OPEC will boost production by a further 500,000 barrels a day if prices stay above 28 dollars for over 20 days.
Oil prices fell when trading began in London on Monday to 32.20 dollars a barrel from 32.78 dollars at the close on Friday after OPEC agreed the bigger-than-expected 800,000 increase.
The increase was the third this year aimed at easing prices not seen since the Gulf War shook the world oil market a decade ago.
The Saudi Arabian minister described the move as "in the right direction".
He also confirmed that Saudi Arabia had wanted a bigger increase at Sunday's meeting, but said he was satisfied with the agreement. "We asked for a million, but it's the right number," he said.
The closely watched OPEC meeting had been under intense pressure from Western oil-consuming countries to act decisively in the face of consumer protests and warnings of a global world slowdown.
The 800,000 figure was in the middle of a range forecast to be agreed by OPEC, but more than an increase 500,000 barrels backed by many smaller OPEC members wary of losing market share if too big an increase were agreed.
But within hours of the accord the Saudi minister said that output could by increased by even more in November, when OPEC ministers will meet again the review the market.
"OPEC is ready to go ahead with another rise in its production next November, if the increase decided today does not succeed in damping down the price rise," he said, quoted by the WAM news agency in Dubai.
OPEC ministers, this year celebrating their 40th anniversary, is due to meet again on November 12 to review the effect of Sunday's decision on world markets.
Most OPEC members agree that there will not be another increase before the November meeting.
"We will not take action before November 12th," said Qatari Minister Abdullah al-Attiyah, reiterating OPEC's desire to bring prices back down to their preferred range of 22-28 dollars a barrel.
Analysts and authorities warned that the 800,000-barrel hike might not be enough.
"Oil prices will dip but not very much," said David Nesbitt, a trader with Prudential Bache brokerage in London. "If there is any more of a dip in prices you will see some buying."
"The OPEC accord hasn't really broken down properly," he told AFP. "There is a belief that some of the extra oil promised is just part of extra output produced in August. We could only be seeing an increase of 130,000 barrels a day which isn't very much."
OPEC reiterated this weekend its criticism of pressure from Western governments, hitting out at them for levying huge taxes on oil products, but blaming OPEC when consumers protest.
"OPEC expresses the hope, once again, that the governments of these countries will reduce their high taxes on a barrel of oil," said Venezuelan Oil Minister Ali Rodriguez, current OPEC president.
OPEC blames the current high price of crude on record low stocks of oil, at a time when global economic growth is fuelling demand and the Northern Hemisphere is approaching the cold winter months.
OPEC has already increased production twice this year, moves that had little effect on prices, which have tripled since a low of under 10 dollars a barrel last year.
OPEC FAILS TO AGREE ON NEW SECRETARY GENERAL
OPEC failed on Monday to agree on a new secretary-general, postponing a decision until November, Iran's oil minister said.
The failure was seen by analysts as a reflection of continuing political differences within the group of oil producing nations, notably between US-friendly kingpin Saudi Arabia and other smaller members.
The second three-year mandate of current Nigerian secretary-general Rilwanu Lukman ends this year, and candidates from Saudi Arabia, Iraq and Iran are standing to succeed him.
The issue has caused political tensions within the 11-member Organization of Petroleum Exporting Countries (OPEC), notably sensitive as it seeks to present a unified front to stabilize world oil prices.
Qatari Minister Abdullah al-Attiyah downplayed the significance of the failure to agree on a new chief.
"It's not a big issue. It's not the first time we have had a dispute about the secretary-general.
We have a very professional guy there now. We have a long term to discuss it," he said.
Asked if OPEC could decide on a new secretary-general at its upcoming heads of state summit in Caracas at the end of September, the Qatari minister replied: "I don't think so."
OPEC ministers are due to meet in Vienna on November 12 to review the impact on markets of their latest production increase, the third this year.
Asked if they could agree on a new secretary-general at that meeting, al-Attiyah said: "Maybe."
One analyst told AFP that the continued failure to agree on the post arose from the blocking by Iran and Iraq of a candidate from Saudi Arabia, by far OPEC's largest producer and seen as pro-US.
Iraq notably has said Saudi Arabia will get the post "over my dead body," said the analyst, asking not to be named – VIENNA (AFP)
© 2000 Al Bawaba (www.albawaba.com)