Today's London Times
February 21 2000
BUSINESS NEWS
< /TR>
Opec set to resist US calls to lift oil
output
BY MARTIN BARROW
OIL producers appear ready to resist intense pressure
from America to lift output to head off the sharp rise in the
price of crude.
Members of Opec are likely to vote against an increase in
output from April 1, opting instead to extend existing
restrictions on oil production until September. In March
1999 oil producers decided to cut output by a total of 2.1
million barrels per day, of which Opec accounted for 1.7
million.
This is in spite of calls from large industrial nations, led by
the US, for Opec to produce more oil, in the hope that
this would bring crude prices down from their ten-year
highs of about $30 per barrel.
Yesterday senior Opec officials said the organisation
believed the price of oil was likely to come down of its
own accord now the peak season for winter demand in
the northern hemisphere was drawing to a close.
Gulf states expect Opec crude to trade at about $25 per
barrel by the end of March, well below the current price
but at the top end of Opec's preferred price range of
between $20 and $25.
An Opec official said: "If the price of the Opec reference
basket is $25 in March, we will not increase production.
"At present, there is no agreement to increase production.
Given the situation on the market and from a strictly
technical point of view, we are leaning toward a renewal
of the production ceiling until September 2000."
If September prices remain at $25, Gulf states would
support an increase in production ahead of next winter to
meet the anticipated rise in demand.
Gulf oil exporters are due to meet in Riyadh on
Wednesday to discuss the situation in the market, and the
consensus view is likely to be that prices are at an
acceptable level, as far as Opec is concerned.
Leading industrial nations have expressed concern at the
rise in oil prices over the past year, mainly because of the
inflationary threat. In South-East Asia the fear is that
higher oil prices will choke off the economic recovery
after the financial crisis of the late 1990s. Japan and South
Korea, Asia's two economic powers, both rely heavily on
imported oil.
Bill Richardson, the US Energy Secretary, is due in Saudi
Arabia next weekend on a tour of the main oil producing
nations. Mr Richardson, who has previously expressed
disquiet at the level of oil prices, has faced calls in
America for the US Government to draw down oil from
strategic reserves in an attempt to bring down prices. |
