6/7/98 Qatar Pledges To Cut Crude Oil Production Further To Boost Prices
DOHA, Qatar -(Dow Jones)- Qatar announced Sunday it will join the so-called Riyadh Pact oil producers with a pledge to cut crude oil output by 20,000 barrels a day beginning July 1 to boost sagging oil prices.
After meeting with Saudi Oil Minister Ali Naimi, Qatar Oil Minister Abdullah bin Hamad al-Attiyah said that Qatar supports the Amsterdam agreement reached by Saudi Arabia, Venezuela and Mexico last week to further cut production by a combined 450,000 barrels per day beginning next month. The Amsterdam pact, announced Thursday, stated that Saudi Arabia will cut production by 225,000 barrels per day; Venezuela, by 125,000 b/d, and Mexico by 100,000 b/d to stabilize the oil market. These cuts would be in addition to reductions the OPEC and non-OPEC producers agreed to make in March to pull as much as 1.7 million b/d off the market through the end of the year.
Despite the fresh pledges to trim crude supplies, the market remains skeptical that the promised cutbacks will be enough to boost the prices significantly. With this in mind, the Saudi minister began a quick trip to regional allies Sunday to secure further cuts from them. Nami has so far visited non-OPEC Oman and Qatar. Oman didn't immediately respond to his call for cutbacks.
Oman and Qatar are members, with Saudi Arabia, in the Gulf Cooperation Council, which also includes OPEC members United Arab Emirates and Kuwait and non-OPEC member Bahrain. The GCC's oil ministers plan to meet June 16 in the Saudi capital, Riyadh, to discuss the oil market.
In the voluntary cuts announced in March, Qatar cut 30,000 barrels per day of its output. The latest pledged cuts will bring Qatar's total output reduction to 50,000 barrels per day, or 7.1% of its estimated output.
Qatar is the smallest oil producer among OPEC nations, with an OPEC-assigned quota of 413,940 barrels a day. However, it is estimated to be the largest quota-buster in percentage terms, with actual production running around 700,000 barrels per day.
Naimi's trip is expected to take him to United Arab Emirates and Kuwait, which are widely expected to announce new cutbacks soon.
Mexico's oil minister, Luis Tellez, said Friday in Oslo that two unnamed OPEC member countries will soon announce oil output cuts totaling 150,000 barrels a day. Venezuelan Oil Minister Erwin Arrieta said he believed the two countries Tellez referred to are the United Arab Emirates and Kuwait.
Tellez met informally Friday with the Norwegian oil and energy minister, Marit Arnstad, and informed Arnstad of the results of Thursday's meeting in Amsterdam among the Saudi, Venezuelan and Mexican oil ministers.
Tellez expressed satisfaction with the Norwegian decision in late March to cut oil production by 100,000 b/d, and emphasized that he hadn't asked Arnstad for further cuts. "This is enough to restore the balance in the market," he said.
Arnstad reiterated that Norway has no plans to cut its oil production further. "Today's meeting had an informative character," she said. "I told Tellez what had been done from the Norwegian side."
"Cutting Norwegian oil production further is not a topic," she added.
Moreover, Arnstad confirmed her planned meeting with Arrieta in late June. "Like today's meeting with Tellez, this meeting will also have an informative character," she said.
Arnstad added that she would closely monitor the oil price development ahead of the OPEC meeting due to start June 24. Norway will attend the OPEC meeting, but only as an observer, Arnstad said.
Arrieta said Friday that it is too early to judge the oil market's reaction to the production cuts announced Thursday and Friday. "We need to wait until the end of July," to see the true impact of the cuts on the market, Arietta said.
Industry analysts were in broad agreement Friday, before the announcement by Tellez, that the additional 450,000 b/d cuts agreed to Thursday by Saudi Arabia, Venezuela and Mexico need to be roughly doubled to ensure sustained price improvement into next year.
Crude-oil futures settled little changed and petroleum-products futures ended modestly lower Friday on the New York Mercantile Exchange.
July crude oil closed down 5 cents at $15.07 a barrel. August crude oil inched up 2 cents to end at $15.71 a barrel.
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