US President Bill Clinton will meet Saudi Crown Prince Abdullah bin Abdel Aziz in New York on Wednesday to discuss current oil prices, a senior US official said Tuesday.
"They will talk about the energy situation and the mutual interest in a fair balance between production and demand that creates stability," said US national security advisor Sandy Berger.
Clinton and Prince Abdullah will be in New York to attend a global summit at the United Nations. The prince will later travel to Latin America and will attend an Organization of Petroleum Exporting Countries summit in Caracas September 26th-28th.
Oil prices ranged close to 10-year highs on Tuesday, prompting fresh calls for action from OPEC.
A day after setting a new decade-long record of 32.80 dollars a barrel in London, prices in mid-afternoon trading in New York Tuesday had climbed to 33.85 dollars a barrel.
The European Commission described the trend as "unacceptable" and added that it was working on an action plan to counter the recent market moves.
But analysts now fear that even if the 11 OPEC nations send calming signals from a ministerial meeting in Vienna September 10th and start to pump more oil, the damage to industrial economies has already been done.
US reserves have dwindled dramatically, threatening shortages, and prices will take a lot of coaxing down, they say.
Saudi Arabia recently said it was favorable to an increase in OPEC output in a bid to stabilize prices.
OPEC last month surpassed its overall production quota by 600,000 to 700,000-barrels a day, according to George Beranek of the Washington trading firm Petroleum Finance.
He warned that even if the organization at its Vienna meeting decided on a 500,000-barrel-per-day increase, "it won't change anything on the market."
"A production increase that is large enough to convince oil markets that there'll be plenty of oil this winter will be at least one million barrels a day," he added.
Saudi Arabia will play a critical role in any OPEC decision because it is one of the few members of the cartel that enjoys supplemental capacity.
While the kingdom wants to preserve its strategic alliance with the United States, it is also anxious to maintain ties to Iran and its fellow Gulf producers, according to Roger Diwan, also of Petroleum Finance.
And even if OPEC does agree to an increase of at least a million barrels a day, transportation limitations would prevent all of it from reaching the market.
"It's sort of a Catch-22 situation right now," Beranek said - WASHINGTON (AFP)
© 2000 Al Bawaba (www.albawaba.com)
