Saudi oil forum aims to bridge divide between producers and consumers

Published November 16th, 2000 - 02:00 GMT

Saudi Arabia, the world's biggest oil exporter and a major ally of the biggest consumer, the United States, hosts a conference this weekend to try to bridge the growing divide between producers and consumers. 

 

The 7th International Energy Forum is "a good base to come to an agreement between the two sides to stabilize oil markets and prices," Emirati Oil Minister Obeid bin Seif al-Nasseri said. 

 

His Saudi counterpart Ali al-Nuaimi sees the aim of the Friday-Saturday forum, which US Energy Minister Bill Richardson will attend, as to "widen dialogue and put a stop to confrontation." 

 

Consumers have to realize the difference between the price of oil and that of refined products sold in petrol stations," Nuaimi said. 

 

But Mohammad Abdeljabbar, senior associate with Washington-based Petroleum Finance Co., said the meeting -- at which ministers from non-OPEC countries Britain, Mexico, Norway and Russia are also expected -- would be little more than a talking shop. 

 

"I don't see anything coming out of this. It is basically a gathering for an exchange of ideas and will have no market impact, certainly in the short term," he told AFP. 

 

He said producers would most likely continue their call for tax cuts on oil products in consumer countries. 

 

"They will voice their concerns, but I don't see any outcome from this as western countries seem resolute in their decision not to adjust their tax regimes," Abdeljabbar said. 

 

The Organization of Petroleum Exporting Countries (OPEC) has come under heavy pressure to help bring down crude prices which have soared to 10-year highs, sparking consumer protests, notably in Europe, and warnings of a global economic slowdown. 

 

Consumers, he predicted, would have little to say bar a renewed call for producer countries, especially in the Gulf region, to open up their oil sector to more investment and western technology. 

 

However, Manouchehr Takin of the Centre for Global Energy Studies in London said the conference delegates could draw up an actual list of things to be done. 

"These meetings used to be just rhetoric, but we are pinning more hope on this one," Takin said. 

 

"We are not expecting tangible results vis-a-vis production levels or taxation cuts, but at least the consumers and producers can meet, get to know each other, put their views across and exchange ideas," he told AFP. 

 

Takin expected the two groups to "discuss price stability, how to achieve it, the OPEC mechanisms in place, and the price ranges with which they'd be happy." 

 

OPEC has instituted a price-band mechanism that triggers a 500,000-barrels-a-day 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. 

 

Ministers from OPEC meeting in Vienna on Monday said they had all but ruled out allowing the mechanism to automatically trigger a further increase at the end of November for fear of flooding the market. 

 

Oil prices, averaging well above 30 dollars a barrel, have remained above the price bands despite OPEC's four production increases this year. 

 

Richardson said Tuesday that prices remain too high, as a barrel of reference light sweet crude for December delivery peaked in New York at at more than 34 dollars a barrel on fears of an OPEC cut in January to prop up prices. 

 

"Market should dictate the price. We should not set artificial limits. Some countries are talking about a supply cut at the time when people need more oil," he said. 

 

"It is not in the interest of any side to see oil prices sliding badly or increasing too much. So, why shouldn't consumers and producers meet to see if they can find common ground?" asked Jassem al-Saadun, head of the Kuwait-based Al-Shall Economic Consultants. 

 

"There is a common conviction in OPEC, even among the so-called hawks, that meetings with consumers are useful. There are many voices amongst consumers that call for a reasonable price for oil, including the US energy secretary," he said.—AFP. 

©--Agence France Presse. 

 

© 2000 Mena Report (www.menareport.com)

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