AUSTRIA: OPEC APPROVES DEAL TO RAISE WORLD CRUDE OIL SUPPLIES TO CONTROL RISING PRICES

Record ID: 344997

  • Title: AUSTRIA: OPEC APPROVES DEAL TO RAISE WORLD CRUDE OIL SUPPLIES TO CONTROL RISING PRICES
  • Date: 22nd June 2000
  • Summary: VIENNA, AUSTRIA (JUNE 21, 2000) (REUTERS) 1. SLV JOURNALISTS WAITING OUTSIDE BRISTOL HOTEL IN VIENNA 0.05 2. MV /SCU SAUDI ARABIAN OIL MINISTER ALI AL-NAIMI WALKING (2 SHOTS) 0.15 3. SCU QATAR OIL MINISTER ABDULLAH BIN HAMAD AL ATTIYAH WALKING 0.26 (SOUNDBITE) (English) QATAR OIL MINISTER ABDULLAH BIN HAMAD AL ATTIYAH SAYING: We ar
  • Embargoed: 7th July 2000 13:00
  • Keywords:
  • Location: VIENNA, AUSTRIA
  • Country: Austria
  • Reuters ID: LVAUQIA8J2NROJHX18FXWBKGLHH
  • Story Text: OPEC has approved a cautious deal to raise world
    crude supplies and tame runaway oil prices that have pushed up
    energy bills in the West.

    Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah said
    on Wednesday (June 21)
    the cartel agreed to lift output for 10 member countries to
    25.4 million barrels a day (BPD) -- a modest three percent
    increment of just over 700,000 barrels daily.

    Dealers said the increase might not be enough to calm
    prices and crude futures in New York rose 70 cents to 31.35 a
    barrel USD -- well in excess of the 25 USD a barrel OPEC is
    targeting.

    The pact raises production limits for 10 OPEC members,
    excluding sanctions-bound Iraq, to 25.4 million bpd from 24.69
    million. Leakage over quotas means actual supply already is
    running at 25.3 million bpd.

    OPEC Secretary-General Rilwanu Lukman estimated the deal
    would bring 600-700,000 barrels a day of net new oil to the 77
    million bpd world market. That includes more from non-OPEC
    countries that have managed the market with OPEC.

    Outside the cartel, Mexico and Norway soon are expected to
    announce their own additional supplies.

    Asked what OPEC would do if prices stay high, OPEC's
    Lukman said: "We will do whatever it takes to bring (prices)
    down to a level we consider more reasonable."
    OPECs new agreement, effective from July 1, includes Iran.

    Iranian Oil Minister Bijan Zanganeh said he had endorsed
    the deal.

    In March, Tehran opted out of an OPEC pact for more oil
    complaining of undue pressure from the United States.

    OPEC came under pressure from the United States and other
    leading oil importers to lift supply for the second time this
    year after extra deliveries in March failed to control rising
    prices.

    Officials in Washington had suggested that an extra
    million barrels a day would be needed to cool the market.

    But cartel delegates said most OPEC nations, ever fearful
    of a price slump, preferred to adjust export limits by just
    500,000 bpd. Leading producer Saudi Arabia, an ally of
    Washington's was able to convince them to accept the slightly
    higher volume.

    Concerns were that with lowly oil inventories now building
    quickly a higher volume might have tipped prices into a
    downward spiral.

    And most dealers say that crude prices would be lower were
    it not for new environmental rules this summer in the United
    States that have restricted the pool of American gasoline
    supply.

    But there also has been reluctance among some in OPEC to
    sanction a big increment because, already producing to
    capacity, many would be unable to take advantage of higher
    quotas.

    Industry observers say only Saudi Arabia and its Gulf
    allies Kuwait and the United Arab Emirates hold significant
    spare capacity.

    OPEC aggravated the market two weeks ago when it decided
    not to release 500,000 bpd under a price stability mechanism
    set up in March.

    Ministers said the device, designed to adjust supply if prices
    stay outside a 22-28 USD band for OPEC crude, would be kept in operation but it remains unclear exactly how it will work.

    Longer term, high oil prices remain a worry to oil
    producers as well as consuming nations. Producers fret that
    customers will switch to other fuels, like natural gas,
    denting demand for petroleum.

    Rising energy costs already have forced interest rates
    higher in the United States and Europe as central banks try to
    keep inflation under control.


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