Ahead of OPEC ministerial meeting, Abraham says oil prices should be set by market

Published March 15th, 2001 - 02:00 GMT

US Energy Secretary Spencer Abraham on Wednesday maintained world oil prices should be determined by market forces rather than supply changes and pledged a low-key approach to the Organization of Petroleum Exporting Countries. 


"Personally, I think prices should be driven by the market rather than artificially set by supply decisions," Abraham told reporters after a speech here.  


OPEC ministers are scheduled to meet Friday in Vienna, where according to industry analysts, the cartel should announce a production cut in the range of 500,000 to 1.5 million barrels a day to shore up prices in the face of declining seasonal demand. 


"We will be monitoring closely what OPEC decides," Abraham said, adding he had been talking with US allies within OPEC but stressed the content of those discussions would not be made public. 


"I have been in discussion with various oil ministers, not just OPEC, but the others. I don't think it serves us very well in the long-term sense to engage in a lot of dialogue through the press and the public. That approach isn't going to prove to be very successful." 


Abraham's comments were consistent with earlier observations from oil industry analysts, who predicted he would pursue a more discreet relationship with the OPEC producers than his interventionist predecessor Bill Richardson. 


"The style is completely different," said Anthony Cordesman of the Center for Strategic and International Studies here, who predicted Abraham would maintain a dialogue with OPEC producers but -- unlike Richardson -- would avoid going public with it. 


Cordesman noted "the idea that you go from interventionism to non-interventionism is an illusion," since no major importer since 1974 has shunned contacts with oil producers.  


Richardson, ahead of key OPEC meetings, would usually make the rounds of major oil producers in the Gulf. Ahead of the Vienna OPEC parley, Abraham has stayed on native ground. 


At American University here, Middle East specialist Mary-Jane Deeb said regardless of who is the US energy secretary "there will always be a push-and-pull relationship between the United States and OPEC." 


But with Abraham "the style will be different -- probably less confrontational," she agreed, adding that Washington's objective is not to drive prices down to their lowest possible levels, as excessively weak prices would not be "economically viable" for US oil companies. 


Abraham's mission therefore is to try to maintain price levels high enough for the US energy industry but low enough to support a healthy economy, she said.—AFP. 

©--Agence France Presse 2001. 


© 2001 Mena Report (www.menareport.com)

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