The price of oil slipped back towards the 30-dollar level on Monday when the Mideast crisis factor had less influence on a market that is more concerned with OPEC output levels.
A barrel of Brent benchmark North Sea crude fell to $30.54 from $30.85 at the close on Friday.
While the volatile situation in the Middle East has held sway over the oil market for much of the autumn, driving prices to 10-year high points, the tentative moves towards a diplomatic resolution of the Israel-Palestinian crisis have taken the steam out of crude prices.
Instead the focus has reverted to production of the Organisation of Petroleum Exporting Countries (OPEC), who last week hiked output by 500,000 barrels per day to bear down on prices.
OPEC has been reluctant to open the oil floodgates to bring down prices because it is nervous that after the winter is over there will be too much crude on the market, causing a price crash.
The Middle East Economic Survey (MEES) said on Monday that the organisation's current output level would be "a good deal more than enough" to meet demand for both consumption and stocks up until the middle of 2001.
OPEC would have to embark on a "substantial production cut" before the second quarter of 2001 to keep the basket price from falling below the cartel's band of $22-28 a barrel, it said. The basket price stood at $30.22 on Friday.
But one OPEC member at least is not planning output cuts in the longer term: Iranian Oil Minister Bijan Namdar Zangeneh said over the weekend that Tehran would "double its production capacity between now and the year 2020" to hold its own within the OPEC cartel.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)