OPEC’s Worries About Other Producers Sink Oil Prices
VIENNA, Austria (AP) _ OPEC’s frustration over losing its share of world oil markets to other producers raised speculation 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 Organization of Petroleum Exporting Countries’ summer meeting 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 New York commodity trading firm Refco Inc.
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 _ of 24.5 millions barrels a day _ but some ministers said privately that OPEC might substantially boost its output next year. Traders feared this could harm prices.
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 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.
``There’s no easy solution. The only solution is cooperation between OPEC and non-OPEC,″ said Venezuelan oil minister Erwin Arrieta, who was elected the cartel’s president on Monday.
``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 growing demand for oil and restrained production by Saudi Arabia and Kuwait. Still, OPEC is fetching well under its target of $21 for an average barrel of 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.