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To: Tulvio Durand who wrote (24332)	6/18/1998 12:22:00 AM
From: Czechsinthemail	Respond to of 95453

6/17/98 OPEC Faces Long Odds In Battle Against Overproduction, Low Prices NEW YORK -(Dow Jones)- The Organization of Petroleum Exporting Countries is staring at the weakest oil market since the disaster year of 1986, and traders are betting the producers can't find a quick fix, if they find one at all. OPEC's average price plunged to $10.11 per barrel this week _ a 12-year low and less than half the official OPEC target of $21 that analysts now call a joke, the Associated Press reported. Some of the biggest players in OPEC, including Saudi Arabia and Venezuela, are promising a new round of production cutbacks - after an earlier emergency deal failed to rescue the market. Kuwait and the United Arab Emirates pledged more cuts Tuesday. The Kuwaiti oil minister, Sheik Saud Nasser al-Sabah, said he hopes petroleum exporters can come up with another 1.2 million barrels in production cuts by next week, when OPEC holds its summer meeting. But analysts aren't sure whether OPEC and its non-OPEC allies in Mexico and Oman can slash production by even 1 million barrels a day. And even if OPEC delivers, the glutted market might not recover for months. The cheap oil is a bargain for consumers, including gasoline-guzzling U.S. motorists, but it is devastating for the oil producers who planned their national budgets based on much higher oil revenue. "It's pretty disastrous and there's not really anything they can do to alleviate the troubles very quickly," said Leo Drollas, chief economist at the Center for Global Energy Studies in London. "They might as well write off '98." Ten of the 11 members of OPEC pledged this spring to cut production by 1.245 million barrels a day. They have delivered most but not all of those cuts, but Iraq complicated the formula by raising production under a United Nations oil-for-food deal, leaving OPEC short of its target. News that the U.N. might be closer to ending its embargo of Iraqi crude exports, imposed after Iraq invaded fellow OPEC member Kuwait in 1990, prompted oil traders to push prices even lower. If Iraq gets back in this year, the timing could hardly be worse for the rest of OPEC and non-OPEC producers, including Norway, who have tried to rescue the market. "Never dismiss Iraq," warned Mehdi Varzi, oil analyst at Dresdner Kleinwort Benson in London. Oil rallied Tuesday and again Wednesday on the futures markets, but in New York the benchmark light sweet crude contract for July was still below $13 a barrel _ a depressing number for anybody in an industry that was enjoying premium oil prices of more than $20 per barrel late last year. Even if OPEC were to announce another 1 million barrels of daily production cuts - the target many analysts are looking for - it could take months of adherence to those numbers to reduce the supply glut. And OPEC's members have long lacked the willpower to stick to their production agreements. OPEC formally opens its meeting in one week in Vienna. OPEC members are Algeria, Iran, Iraq, Indonesia, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.