Opec sees need to lift output
by Robert Corzine - 21 Feb 2000 01:39GMT
Leading oil exporters have reached consensus on the need to increase supplies to world markets but details of the size of an increase and its timing have yet to be resolved, according to a Gulf oil official.
Intense discussions on the need for an increase have been underway among members of the Organisation of Petroleum Exporting Countries for some time. They have taken place against a backdrop of growing international political concern - especially in the US, the world' biggest oil market - of the possible negative economic effects of rising oil prices, which have recently tested fresh post-Gulf War highs.
Last March, Opec, supported by Mexico and Norway, Russia and Oman, reversed a sharp slump in oil prices by imposing swingeing curbs on output. The total output cut agreed was over 2.1m b/d for a period of one year. The price of Brent crude, which touched 12 year lows of around $10 a barrel early last year, finished the year in the mid $20s a barrel as a result.
Now Opec members are understood to be studying a number of issues which will have to be resolved before they arrive at a decision as to the size and timing of an increase. These include detailed studies into the impact of the winter on global oil demand and inventories and the extent to which speculation, rather than fundamentals such as supply and demand, is responsible for the latest surge in oil prices.
The official said some issues - such as the actual state of post-winter inventories - should become clearer by next month.Opec oil ministers are due to meet in Vienna at the end of March, days before the expiry of the cuts agreement, although bilateral contacts both in person and by telephone are expected to be frequent over the next week or so as they debate the scope of any increase: "They are still debating the issues," said the official. "There is still a question mark over the numbers."
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