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To: Robert T. Quasius who wrote (46203)	6/10/1999 10:16:00 AM
From: Fitz	Respond to of 95453

FOCUS-Oil exporters plan stable price strategy (adds more quotes, background) By Richard Mably LONDON, June 10 (Reuters) - World oil exporters aim to stabilise volatile petroleum prices by intervening in the market if it strays too low or too high, a senior Gulf official said on Thursday. Saudi Arabia has taken a leading role in discussions with other OPEC and non-OPEC producers on a strategy to prevent a repeat of damaging boom-bust oil price cycles, said the official, who is familiar with Saudi government policy. "If the prices move ... then we will decide whether it is necessary to intervene but we will not jump in immediately. The concept is to have a stable price -- not too high or too low," the official said. The oil price that exporters had in mind as a suitable range was $18-$20 a barrel for international benchmark UK Brent blend crude, he added. The strategy is a departure for OPEC producers which traditionally have only intervened in the market in a controlled way to lift weak prices. Now producers have become increasingly aware of the need not to allow prices to get overheated and stunt demand. "Oil producers are willing to do whatever is needed to stabilise the oil market now and in the future, including further cuts if necessary," said the Gulf official. He said members of the Organisation of the Petroleum Exporting Countries plus non-OPEC Mexico, Oman and Norway were involved in talks to agree a mechanism for market intervention. "Now we talk about a range rather than a target," he said in reference to OPEC's old $21 a barrel target set in 1990. "They are with us on the price," he said of other oil producers. He stressed that Saudi Arabia thought it highly unlikely that oil markets this year would require another boost in the form of output cutting measures. On the contrary, prices more likely could get overheated. "All the information on the market right now indicates the price will definitely go up and reach the top end of the $18-$20 range in the fourth quarter," the Gulf official said. But he said that it was too early to say whether producers might have to intervene to increase supplies to cool the market down if prices went above $20 a barrel for too long. "The reaction of the producers if that happens is not yet known. We will have to wait and see for that time," he said. Brent at $18-$20 was deemed by oil exporters beneficial to both oil producing and consuming nations, the official said. That price range would protect oil producers' income and the health of the oil industry in general, avoid any damage to the world economy and so ensure growth in world oil demand and discourage competition from alternative energy sources. The plan was discussed during the visit of Mexican Oil Minister Luis Tellez to his Saudi counterpart Ali al-Naimi in Riyadh last week. The two men have played a leading part over the past year in orchestrating a series of supply curbs to restore oil prices from the worst slump in a generation. Their new arrangement is designed to build on the success of producers in March in agreeing output limits stringent enough to lift the price of Brent to $16 from less than $10 in February. OPEC in March agreed to extend supply curbs by 1.7 million to a total 4.3 million bpd for a year until end-March 2000. ((London newsroom +44 171 542 6280 email london.energy.desk@reuters.com)) June 10, 1999 8:35am Source: Reuters