OPEC’s Worries About Other Producers Hit Oil Price
VIENNA, Austria (AP) _ OPEC’s frustration over losing its share of world oil markets to other producers raised speculation on Monday that the cartel might boost its output.
A world benchmark grade of oil fell more than 60 cents per barrel after the first day of the summer meeting of the Organization of Petroleum Exporting Countries here.
The market was humming with concerns that OPEC might increase production to send a message to competitors, said Marcie Forsyth, a vice president at the commodity trading firm Refco Inc. in New York.
Indonesian oil minister Ida Bagus Sudjana said competitors such as oil companies operating in the North Sea take ``the lion’s share″ of the world’s growing appetite for oil. ``Over-supply will lead to lower oil prices,″ Sudjana said in an address that opened the meeting.
OPEC says it will stick by its current production ceiling this year, but some ministers have said privately that the cartel might substantially boost its output next year. Traders feared this could harm prices in a well-supplied market, but it would discourage others from pumping too much oil.
On the New York Mercantile Exchange in New York, near-term delivery contracts for light, sweet crude oil fell 62 cents per barrel to finish at $18.22 _ its lowest close in three months.
Saudi Arabia’s influential oil minister, Hisham Nazer, plans to travel to Norway to meet with his Norwegian counterpart, Jens Stoltenberg, later in the week, OPEC sources said Monday. OPEC members have previously complained to Britain and Norway about rising output in the North Sea.
Asked about the prospects for cooperation from the non-OPEC producers, Qatar’s oil minister, Abdullah bin Hamad Al-Attiyah said: ``I’m not optimistic, not pessimistic _ I’m realistic.″
With no official talk of changing OPEC’s production ceiling of 24.5 million barrels a day, or the quotas of individual members, oil ministers were launching plenty of verbal attacks, but few if any proposed solutions, for their dilemma with the non-OPEC producers.
``There’s no easy solution. The only solution is cooperation between OPEC and non-OPEC,″ said Venezuelan oil minister Erwin Arrieta, who was elected Monday as president of the cartel.
``They’ve been taking a free ride for so long,″ Libyan oil minister Abdalla Salem El-Badri said. ``I hope they realize that someday they’ll have to cooperate with us.″
Oil prices have been firmer this spring, which experts attribute to both the growing demand and restrained production by Saudi Arabia and Kuwait. Despite the firmness, OPEC is still fetching well under its target of $21 for the average barrel of its crude.
Iraq is also producing a mere fraction of its capacity, because of the embargo on its oil exports since it invaded Kuwait nearly five years ago.
The specter of Iraq’s re-entry into the market has hung over the industry for years.
Iraqi oil minister Safa Hadi Jawad said Monday his country is complying with the United Nations conditions for renewed oil sales, and he said he expects to be back in the market before year’s end.
Iraq can produce 2 million barrels a day from the outset and within about a year can get to 3.6 million barrels a day, he said.
It remained unclear Monday whether Gabon would be in or out of OPEC. Gabon has complained about rules that force it to pay the same membership dues as Saudi Arabia and the other huge players. The West African nation did not send a delegation to Vienna.
``I found much sympathy for Gabon’s plight, allied to a strong desire for it to remain within the organization,″ Sudjana told the other ministers. ``I am therefore confident we can settle the matter, to the satisfaction of all our member countries.″