OPEC refuses to bow to pressure to cut oil production

Published November 14th, 2000 - 02:00 GMT

OPEC ministers, haunted by fears of an oil supply glut and ensuing market collapse, refused on Monday to bow to pressure to bolster output despite 10-year high prices. Instead, they called a special meeting for January 17 to discuss cutting production.  

 

Qatar Energy Minister Abdullah al-Attiyah, asked about the chances of OPEC opening up the taps before January, told reporters: "No, I don't think so, unless there is a force majeure."  

 

Oil prices, well above $30 a barrel, were too high despite OPEC's four production increases this year, ministers said at a final, official meeting which lasted just over one hour. But OPEC president Ali Rodriguez blamed steep taxes in consuming countries and market speculation, and said OPEC had done all it could to try and bring prices down.  

 

"OPEC has more than fulfilled its role as a reliable oil supplier," he said in an address to colleagues at the headquarters of the 11-nation Organization of Petroleum Exporting Countries (OPEC).  

 

"The true reasons for currently high prices lie behind a series of other factors not directly linked to crude oil supply," Rodriguez said, blaming the distortions caused by taxes in consumer nations.  

 

Saudi Arabia, easily the world's biggest oil exporter and a major ally of the biggest consumer, the United States, tried to bridge the emerging divide between the two sides. "I want to reaffirm there is no elimination, no ruling out of further increments," he told reporters minutes before an official meeting of the 11-nation body.  

 

"We have continually said that when it is determined that there is a shortage of supply, OPEC, certainly Saudi Arabia, will rise to the occasion to make up the shortage."  

 

Ministers had delayed their official Vienna meeting by a day until Monday morning after a funicular railcar inferno killed at least 154 people in Austria on Saturday.  

 

"I would like to extend our most sincere condolences to the government and people of Austria and to the families of the victims," said the OPEC president Rodriguez, who was chosen to be new secretary general from next year.  

 

Oil prices have prompting fuel price protests in consumer countries and threatening a global economic slowdown. But OPEC ministers said they feared a future price collapse, citing expert forecasts that supplies at current levels would outstrip expected demand by at least a million barrels a day by March next year.  

 

They have all but ruled out allowing an OPEC price-band mechanism to automatically trigger a further 500,000 barrels a day increase at the end of November.  

 

The mechanism triggers an output increase if prices remain over $28 a barrel for 20 working days or a production cut if they persist below $22 for 10 consecutive working days. But Saudi Arabia's Naimi refused to pronounce the mechanism dead.  

 

"The price band is still in effect. We would like to see a price in the $22-28 band," he said. Asked about the critical factors for any decision at the January 17 meeting in Vienna, he said ministers would take into account the effect of all the increases so far, inventory levels and prices.  

 

"We would like to see a price that is reasonable," he said. Analysts said OPEC was trying to persuade the market that oil prices were now stuck at higher levels. Generally OPEC is trying to convince the market that prices are in a new higher trading range," said Mehdi Varzi, a London-based analyst with Dresdner Kleinwort Benson.  

 

"Everybody here is concerned about how high the price is going to go but OPEC is concerned about how low the price is going to go after it has peaked," he told AFP. - (AFP) 

 

© Agence France Presse

© 2000 Mena Report (www.menareport.com)

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