Monday March 22 12:38 AM ET
OPEC To Ratify New Deal To Revive Prices
By Richard Mably
VIENNA, Austria (Reuters) - OPEC oil ministers arrived Sunday for a meeting that will bless
new output curbs aimed at reviving prices after oil's worst ever slump.
Organization of Petroleum Exporting Countries members were confident no last minute snags
would upset a prearranged accord on lower supply limits.
''We are finished, it is all done,'' Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah said.
''Absolutely. This time it is very clear and positive,'' Venezuelan Oil Minister Ali Rodriguez
told reporters on his arrival in Vienna.
''It is concluded. There is nothing but solidarity,'' added a senior Iranian official.
The deal thrashed out by five oil ministers in The Hague March 12, with the consent of others
contributing, will cut output from 10 OPEC members 1.717 million barrels per day starting in
April.
The pact aims to restore the prices exporters were familiar with before Asia's financial crisis
and oversupply sent oil markets crashing to less than $10 last year.
''The idea is $17 to $19 Brent,'' a Gulf official in Vienna said. ''By the third quarter you will
see it around that level. Prices will rise when the market feels the cuts.''
Oil prices since the Hague pact have risen sharply but still remain no better than last year's
$13.30 average for Brent -- a 22-year low.
OPEC delegates said the duration of the new pact had still to be decided but that it was likely to
be imposed for at least one year.
It will reduce OPEC production to 22.976 million bpd from 24.692 million, excluding
sanctions-bound Iraq. Non-OPEC Mexico, Norway and Oman together have pledged an
additional 286,000 bpd of cuts.
Russian Energy Minister Sergei Generalov, due in Vienna Monday, may also pledge lower
exports from his country.
OPEC, in control of more than half the world's oil exports, last year sliced output by 2.6 million
barrels a day but it proved insufficient to ease huge stockpiles of oil.
The cartel saw petroleum export revenues slump 30 percent, losing $50 billion.
This time producer countries are confident they have resolved the issues that ruined last year's
efforts at market intervention.
They insist there will be no repeat in 1999 of the sloppy adherence by some countries with
official output limits.
''There are no fears this time about compliance,'' a Gulf official who is familiar with Saudi
policy said Sunday. ''Every country is willing to comply fully. They have seen the consequences
when they do otherwise.''
A settlement two weeks ago between Saudi Arabia and Iran of the squabble that had blocked
any earlier discussion of new oil cuts paved the way for the Hague pact.
Venezuela's Rodriguez said his country, like other countries, would implement its lower
production levels immediately.
Meanwhile Iraq's Oil Minister Amir Mohammad Rasheed told reporters in Vienna that Iraq's oil
exports might rise a little later this year but would not match last year's big jump.
Oil consuming countries for the time being remain comfortably protected by a global inventory
stock excess estimated as high as 500 million barrels in a world market that uses 75 million
barrels daily.
+++++++++++++++++++
Monday March 22 2:36 AM ET
Oil Market Cheers
By Neil Fullick
SINGAPORE (Reuters) - Crude prices in Asia were stronger Monday, as OPEC appeared
ready to quickly ratify an agreement to cut world supplies by more than two million barrels per
day (bpd).
Further price support came from a halt in the Iraq-Turkey pipeline, the main export route for
Iraq's oil to the West.
''There's little news about the pipeline, but it's definitely helping the market. At OPEC, it seems
like everything will go ahead without a glitch,'' an oil broker said.
NYMEX April crude futures were last traded at 0700 GMT at $15.38 per barrel, up 14 cents
from the New York close Friday.
May NYMEX crude was last traded at $15.50, up 14 cents.
Brent May crude futures, trading on the Singapore International Monetary Exchange were last
traded at $13.67, up 22 cents from London Friday.
OPEC ministers over the weekend said they expected the oil cartel to quickly agree to cut 1.7
million barrels per day (bpd) of production, as part of a wider plan signed in The Hague two
weeks ago for world supply to be curtailed more than two million bpd.
''We are finished, it's all done,'' Kuwait oil minister Sheikh Saud Nasser al-Sabah said ahead of
the meeting.
''It is concluded. There is nothing but solidarity,'' a senior Iranian official said.
OPEC is gathering in Vienna for a formal meeting Tuesday expected to ratify the Hague
agreement. Most details had been settled and agreed ahead of the meeting, oil industry sources
said.
Ali al-Naimi, the oil minister of OPEC heavyweight Saudi Arabia, said he expected the latest
agreement to cut supplies among world producers to finally drag the oil market out of its worst
crisis in more than 20 years.
''The reason that this one will probably succeed even more than previous resolutions is the fact
that this decision is suggested and backed and directed by the highest authority in every
government that has participated in the decisions process,'' he told reporters.
Brent slumped to average just $13.34 per barrel last year, its worst performance in more than 20
years. That resulted in windfall gains for importers, but OPEC said it lost more than $50 billion
in revenues.
Further price support for oil came from news the pipeline through Turkey, which carries Iraqi
crude for Western markets, was shut down following a bomb blast.
The blast in the southeast province of Mardin caused a large fire but limited damage, regional
governor Fikret Guven said. The pipeline was closed for inspections after the explosion.
Analysts have generally applauded the plan to cut supplies, so long as the often fractious OPEC
can maintain production discipline, but have forecast it will take the rest of 1999 for the market
to work off its stock flab.
+++++++++++++++
Monday March 22 6:16 AM ET
OPEC Confident New Pact Will End Oil Glut
By Michael Georgy
VIENNA (Reuters) - OPEC ministers Monday were gathering to endorse tough new supply
limits they appear confident will finally end a year-long oil glut.
The ministers said they would quickly sign off at Tuesday's conference on prearranged output
curbs aimed at lifting oil prices from the lowest levels in two decades.
Organization of the Petroleum Exporting Countries' members said there were no last minute
snags to upset the accord removing seven percent, just over 1.7 million barrels daily, from
cartel exports.
''We are finished, it is all done,'' said Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah.
Smiling and relaxed, ministers chatted with journalists in hotel lobbies -- in stark contrast to the
stony silence which met reporters' queries at the end of a bad-tempered OPEC conference last
November.
''There will be no hitches. We are here to just sign it and go,'' said a Gulf official.
The deal, negotiated by five key producers in The Hague on March 12, will increase OPEC's oil
cuts by 1.717 million barrels per day (bpd) on top of curbs imposed last year.
Saudi Oil Minister Ali al-Naimi said new restrictions for 10 OPEC members would stay in
force for one year from April 1.
It means OPEC will have removed more than four million bpd from the world oil market in a
year, a 16 percent output cut.
OPEC action last year had proved too little too late to tackle the towering petroleum stockpile
exacerbated by failing Asian demand, sending oil prices crashing below $10 a barrel.
The cartel, in control of 55 percent of world oil trade, saw petroleum export revenues slump 30
percent, losing $50 billion.
This time OPEC is confident it has resolved the issues that ruined last year's efforts at market
intervention.
Ministers insist there will be no repeat in 1999 of the sloppy adherence by some countries with
official output limits.
''There are no fears this time about compliance,'' a Gulf official who is familiar with Saudi
policy said Sunday. ''Every country is willing to comply fully. They have seen the consequences
when they do otherwise.''
A settlement two weeks ago between Saudi Arabia and Iran of a squabble which had blocked
earlier discussion of new oil cuts helped pave the way for the Hague pact.
Ministers are keen to restore the $18 oil price they were familiar with before their cartel
allowed world supplies to outstrip slowing demand growth.
''The idea is $17-$19 Brent,'' said a Gulf official in Vienna. ''By the third quarter you will see
it around that level. Prices will rise when the market feels the cuts.''
Oil prices since the Hague pact have risen sharply but still remain little better than last year's
$13.30 average for Brent -- a 22-year low. Brent Monday traded up 10 cents at $13.55.
Non-OPEC Mexico, Norway and Oman have promised their cooperation with OPEC and will
remove a combined 286,000 bpd. In Moscow, a spokesman for Russian Energy Minister Sergei
Generalov, due in Vienna Monday, said Russia will pledge to lower exports by 100,000 bpd
during the second quarter of 1999.
Tuesday's deal is set to reduce OPEC production, excluding sanctions-bound Iraq, to 22.976
million bpd from 24.692 million last July and 27.289 million a year ago.
Iraq's Amir Mohammad Rasheed told reporters in Vienna his country's oil exports might rise a
little this year but would not match the big jump of 1998 which offset a sizeable portion of
OPEC's reductions.
Oil consuming countries remain comfortably protected for now by a global stock excess
estimated as high as 500 million barrels in a world market that uses 75 million barrels daily.
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