IN THE NEWS / Gulf leaders winding up summit, defer decision on oil
ABU DHABI, United Arab Emirates (AP) -- Leaders of six Arab states in the
Persian Gulf apparently have decided to postpone until March a decision on cutting oil
production and prepared to close their summit.
Officials said the Gulf Cooperation Council meeting would end today with a
resolution giving its positions on Iran's occupation of three gulf islands, a unified
customs tariff and the 8-year-old U.N. sanctions on Iraq.
But despite intense discussions on the record-low price of oil, the leaders were not
convinced that further cuts in production would shore up the market, a gulf official said
on condition of anonymity.
Jamil al-Hojeilan, secretary-general of the Gulf Cooperation Council, said Tuesday
that overproduction by oil-rich nations was to blame for the price slump.
Al-Hojeilan told the Middle East Broadcasting Corp., an Arabic TV network, that
"the whole problem" was caused by countries not sticking to production quotas.
Venezuela, Iran, Indonesia and Qatar are believed to be the main over-producers.
"The strategic view of oil policy in the GCC countries is to keep a balance between
supply and demand. We hope that pledges of abiding by quotas agreed upon are
respected," al-Hojeilan said.
He denied that GCC oil ministers had agreed to reduce production.
Officials at the summit earlier had made such a claim to The Associated Press,
adding that the GCC ministers also agreed to ask other producers in the Organization
of Petroleum Exporting Countries to join them in the cuts, starting in March.
The message today was that gulf leaders and oil ministers had decided to defer a
decision on production cuts to an OPEC meeting in March.
Shortly before the GCC meeting began, January futures contracts for Brent crude, a
widely watched benchmark, fell to a record low of $9.92 a barrel on the International
Petroleum Exchange in London.
Gulf oil generally sells at a dollar or two less than the North Sea's Brent, which was
selling for about $20 a barrel as recently as 1997.
The GCC comprises Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the
Emirates. All except Oman and Bahrain are members of OPEC.
The gulf countries, which together sit on half the world's proven oil reserves and
depend on exports for 75 percent of their revenues, have been hit hard by the collapse
of oil prices.
At the start of the three-day summit, Saudi Arabia's Crown Prince Abdullah warned
that the oil boom days were over and that gulf states should face the new reality and
tighten their belts.
He suggested setting a maximum deadline of one year for setting up a GCC customs
union that has been under discussion for 15 years.
A final resolution, to be released later today at the summit's close, includes the
one-year deadline, said summit officials, insisting on anonymity.
The union, the first step to a common market, is a prerequisite for free trade deals
with other trading blocs such as the GCC's main trading partner, the European Union.
Kuwait's Al-Rai Al-Amm daily reported today that GCC leaders received a letter
from Baghdad warning against a final statement that took a tough stance on Iraq.
Summit officials, however, said they were unaware of such a letter.
They said the final resolution would emphasize the need for U.N. sanctions against
Iraq to be lifted, but only if Iraq abides by all Security Council resolutions and
cooperates with U.N. weapons inspectors.
The sanctions were imposed after Iraq invaded Kuwait in 1990, which led to the
Persian Gulf War.
The resolution also will call for international arbitration of a territorial dispute
between Iran and the Emirates, the officials said. Both claim Abu Musa and the
Greater and Lesser Tunbs, three tiny islands Iran annexed in 1992. Iran has rejected
arbitration in favor of direct talks.
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