More oil from OPEC!...- that's a definite maybe..<g>
OPEC Tells Members to Ready Next Oil-Output
Increase (Update3)
By Alex Lawler
London, July 17 (Bloomberg) -- The Organization of Petroleum Exporting
Countries told members to prepare by the end of the month for their third output
boost this year, ending a two-week debate among a group that pumps 40 percent
of the world's oil.
The 500,000 barrels of additional daily supply, equal to 0.7 percent of world
output, will come if prices stay high, OPEC President Ali Rodriguez told the
official OPEC News Agency. Saudi Arabia, the group's most influential member,
proposed the move on July 3 to ensure rising prices don't hurt growth in oil
demand, although some members, including Iran, opposed the plan.
Oil fell 2 percent after the announcement, though prices remain above $30 a
barrel in New York and 50 percent higher than a year ago. With many nations in
OPEC already near their production limits, the increase may be less than
promised, keeping prices high, analysts said.
More ``oil is on its way,'' said Lawrence Eagles of GNI Research. Yet ``it's going
to be an across-the-board increase, which means, nominally, less oil than Saudi
Arabia had promised.''
The increase would raise daily quotas by 500,000 barrels, or 2 percent, to 25.9
million for 10 members of OPEC, excluding Iraq. Of that increase, Saudi Arabia,
the world's largest producer, would pump an extra 162,000 barrels a day.
Benchmark Brent crude oil for September settlement dropped as much as 71
cents, or 2.4 percent, to $28.52 a barrel on London's International Petroleum
Exchange. On the New York Mercantile Exchange, oil for August delivery fell as
much as 78 cents, or 2.5 percent, to $30.62 a barrel.
Rates
Higher oil prices have contributed to rising costs for everything from gasoline to
freight transport. That's slowed economic growth by forcing up interest rates in
the U.S. and Europe. The European Central Bank has boosted interest rates by
1.75 percentage points since November to 4.25 percent, forcing consumers to
pay more for home loans and similar products.
OPEC's members have been split over another boost after increases in April and
earlier this month failed to lower the group's price benchmark to $25 a barrel.
Rodriguez, who is also Venezuela's oil minister, in the past week visited other
OPEC countries to discuss the plan.
Rodriguez ``notified his colleagues, fellow OPEC oil ministers, that in the event of
prices remaining at current levels, they should be prepared to take the necessary
steps to raise output,'' OPECNA said. ``Other things being equal, it is expected
that this will happen before the end of the current month.''
The statement may formalize what OPEC officials have called an informal
understanding to consider boosting supply if an oil index the group watches
stays above $28 for 20 consecutive working days. OPEC adopted the so-called
price-band agreement, a new version of a previous mechanism, at its June 21
meeting in Vienna.
The group agreed in June to raise output by 500,000 barrels a day if the ``average
price of the OPEC reference basket of crudes remained above a certain level for a
specified period of time,'' OPECNA said, without being more specific.
Meeting
The OPEC benchmark, which stood at $28.84 Friday, has been above $28 since
June 20. An Iranian oil official has said the 20- day countdown started July 1,
when the latest quota accord came into effect, which means the limit would be
reached on July 28.
Members had considered a proposal to hold an emergency meeting tomorrow in
Vienna to consider output policy, a step Rodriguez on Friday ruled out. A
meeting in the next few days is unlikely, an OPEC official said.
OPEC decided to share the extra oil that Saudi Arabia had proposed, even
though only the kingdom, Kuwait and the United Arab Emirates can pump more
oil quickly, to ensure unity remains within the group, analysts said.
``This is the compromise they've reached,'' Eagles said. ``We now have to see if
Saudi Arabia accepts the increase or decides to go for the full (amount). This has
important implications for the rest of the year.''
Current New
Quota Increase Quota
Algeria 811,000 16,000 827,000 Indonesia 1,317,000 26,000 1,343,000 Iran
3,727,000 73,000 3,800,000 Kuwait 2,037,000 40,000 2,077,000 Libya 1,361,000
27,000 1,388,000 Nigeria 2,091,000 41,000 2,132,000 Qatar 658,000 13,000
671,000 Saudi Arabia 8,253,000 162,000 8,415,000 UAE 2,219,000 44,000
2,263,000 Venezuela 2,926,000 58,000 2,984,000
Total 25,400,000 500,000 25,900,000 |
