Kuwait Rejects OPEC Accord
GENEVA (AP) _ Kuwait rejected today an OPEC accord that would have given the emirate a modest increase in oil production this summer.
Ministers of the 12-nation Organization of Petroleum Exporting Countries met for more than three hours, trying to find a way to accommodate Kuwait’s demands for a sharply higher production quota during the July-September period.
But the Kuwaitis, hoping to sell more oil so they can pay the costs of rebuilding following the Gulf War, refused to budge.
Other OPEC members had agreed to continue their production quotas in the third quarter in an effort to boost sagging crude prices. The deal was worked out on the third day of the cartel’s summer conference.
The collapse of the deal spelled further division in the cartel, which is seen as increasingly weak and unable to enforce its agreements.
Kuwaiti Oil Minister Ali al-Baghli, asked if he would abide by his quota, responded, ″Of course not.″
The proposal called for OPEC members to nudge the current overall limit of 23.6 million barrels a day slightly higher. Only Kuwait would be allowed to raise production - by 160,000 barrels a day to a total of 1.76 million barrels a day.
Kuwaiti officials dismissed the offer as unacceptable.
Kuwait has not yet said publicly what size production rise would have been acceptable for the summer. But the emirate has said it believes the other OPEC members promised months ago to grant it a big increase.
In the past, al-Baghli has sought a rise of 400,000 barrels a day for a total of 2 million barrels a day.
Gabonese Oil Minister Jean Ping, serving as cartel president, made the rounds this morning, visiting the hotel suites of his colleagues to sound them out on the latest ideas.
Most producers have expressed concern that a sharp boost in oil supply could flood the markets with crude and hurt ailing prices.
Saudi Arabia and Iran, the group’s leading producers, have appealed for restraint, saying they would like prices to go up.
They are frequently at odds over pricing policies. Saudi Arabia tends to favor moderate prices, while Iran fights to push them higher.
Iran, Algeria and others have argued for extending the current output ceiling of 23.6 million barrels a day through the July-September period.
The average price of a basket of crudes monitored by OPEC has been running less than $18 per 42-gallon barrel, well under the cartel’s $21 per barrel target. U.S. and European light sweet crudes are selling at several dollars a barrel more.
Kuwait says the cartel promised a substantial quota increase in February, when the emirate reluctantly agreed to an OPEC-wide cutback to prevent a collapse of prices in the spring.
One Iranian delegate, who spoke on condition of anonymity, said no such guarantee was made.
Under a freeze, Kuwait would continue pumping at its present level and could renew its demands for more oil in the fall when crude sales pick up ahead of the winter heating season.
But the OPEC nations already are pumping 24.2 million barrels a day, 600,000 barrels a day over the output ceiling.
Current production is line with forecasts of demand for OPEC crude in the upcoming quarter. Sales rise as consumers in the United States and Europe use more gasoline for vacations.
Nigeria, according to delegates, has proposed raising the supply ceiling and asking big producers to give up their shares of the increase to Kuwait. Delegates said that was rejected by Saudia, which accounts for one-third of the cartel’s production.
Iran, too, was considered unlikely to give any of its quota to Kuwait.
If Kuwait won a higher quota, other nations, including Nigeria, may insist on extra pumping.
Iraq, which invaded Kuwait in August 1990, is barred by U.N. sanctions from exporting crude. Its oil minister did not attend the talks.
OPEC members are: Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezeula. Ecuador pulled out earlier this year.