Saudi Arabia, Mexico to Make More Cuts if Oil Prices
Don't Rise Further
By Sean Evers
Saudi Arabia, Mexico to Make More Cuts if Oil Prices Don't Rise
Riyadh, Saudi Arabia, June 5 (Bloomberg) -- Saudi Arabia and
Mexico, two of the world's largest oil exporters, said they are
willing to make further output cuts in order to boost oil prices
which have declined about 10 percent in the past month.
Saudi's oil minister Ali al-Naimi and his Mexican
counterpart Luis Tellez met today to review a March pact by world
oil producers to cut production and boost oil prices, which hit a
12-year low in December.
Mexico and Saudi Arabia would be willing to take ''further
action'' if oil prices don't rise, the ministers said in a joint
statement.
A slump in demand from refiners caused oil prices to fall by
$2.50 a barrel since May 5 to a two-month low of $14.55 on
Tuesday. Prices had risen from March until May on anticipation
that supplies would be restricted after the Organization of
Petroleum Exporting Countries' and four other producers,
including Mexico -- which is not a member of OPEC -- pledged to
cut world output by more than 5 million barrels a day.
Brent crude oil for July delivery rose 63 cents, or 4.2
percent, to close at $15.58 a barrel in London yesterday
on the International Petroleum Exchange.
Oil producers, who failed on two occasions last year to stop
prices from dropping to under $10 a barrel in December, believe
an oil price in the $18- to $20-a-barrel range is a fair price --
high enough to avoid causing economic hardship in producing
states, and low enough to avoid recessions in consuming states.
The two oil ministers, who reconfirmed their commitment to a
series of agreements to cut output dating back to April 1998,
said they are ''satisfied with the degree of commitment to the
agreed output cuts by producers from within and outside OPEC.''
OPEC made 91 percent of their promised oil output cuts in
May, according to a Bloomberg survey of producers, oil companies
and analysts showed.
Production from all 11 members of OPEC totaled 25.9 million
barrels a day in May, down 370,000 barrels from a revised 26.3
million barrels a day in April, the survey said.
Tellez will travel to Kuwait tomorrow for a meeting with
Kuwait's oil minister Sheikh Saud Nasser al-Sabah for similar
talks.
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