Ministers Resume Formal Talks On Output Cuts; Prices Move Higher
GENEVA (AP) _ OPEC leaders stepped up the pace of negotiations Monday over cutting oil production to raise prices but fell short of a final accord, officials said.
Rilwanu Lukman, the OPEC president and chief Nigerian delegate, told reporters the cartel was close to an agreement on individual production quotas. He declined to provide any details of the day’s talks.
Officials said the 13 Organization of Petroleum Exporting Countries ministers would meet again Tuesday afternoon, but no specific hour was set.
The Venezuelan oil minister, Arturo Hernandez Grisanti, said without elaborating, ″We are moving.″
One delegation source who was present during Monday’s 2-hour plenary session said the key obstacle to agreement on cutting oil production was Iraq’s refusal to accept a quota lower than that of its war enemy Iran.
In an apparent sign of Iraq’s displeasure, its oil minister, Qassim Taki al-Oraibi, did not attend the meeting although he was in the same hotel where the closed-door talks were held. His delegation was headed by his deputy, Ramzi Salmon Abdul Hussain, according to sources.
Several ministers attempted to paint a bright picture of what has lapsed into a lengthy and difficult negotiation.
Mana Saeed Oteiba, the oil minister of the United Arab Emirates, told reporters, ″We are not very far from the agreement. We have completed the cosmetic surgery and now we are applying the makeup.″
Oteiba, a key figure in the talks, previously had predicted an agreement by last Saturday but was proven wrong.
Despite a deadlock over key elements of the production-cutting plan, world oil markets appeared convinced that OPEC would seal a deal shortly.
In Western Europe, the price of North Sea Brent crude oil for January delivery jumped about 40 cents, to a nine-month high of $16.10 a barrel. Later, the January contract for West Texas Intermediate - the benchmark grade of U.S. crude - climbed 26 cents to $16.36 a barrel on the New York Mercantile Exchange.
″The market seems quite optimistic that the Saudis will pull the rest of OPEC into line,″ said Stephen Turner, an oil analyst at the investment firm of Wood, Mackenzie and Co. in Edinburgh, Scotland.
Saudi Arabia’s new oil minister, Hisham Nazer, was piecing together a detailed proposal for cutting OPEC output by approximately 7 percent, sources said. In brief encounters with reporters, Nazer refused to discuss any aspect of the deliberations.
″We’re working very hard,″ he said with a smile. Other oil ministers similarly were unwilling to comment on the talks, now in their fifth day.
The ministers had held a series of intense bilateral meetings starting Sunday and ending Monday afternoon before reconvening in the closed-door plenary session.
Delegation sources, speaking on condition they not be identified, said one obstacle yet to be overcome was a continuing dispute between war rivals Iran and Iraq over how much each should be allowed to produce.
Iraq’s al-Oraibi pledged to cooperate fully with OPEC but confirmed that his country’s production level remained in dispute.
Also, Gabon and Ecuador, OPEC’s two smallest producers, were meeting resistence to their request to be excused from the production cuts on grounds that they were less able to afford a cutback.
One source said Ecuador and Gabon likely would be forced to accept cutbacks, but in a smaller amount than the average reduction for the other members.
Oil analysts said that if OPEC managed to agree on a production cut of at least 5 percent, world oil prices were likely to rise further, perhaps to OPEC’s short-term goal of $18 a barrel.
Oil prices currently range from $13 to $16 a barrel, barely half the level of a year ago before OPEC triggered a price war that sent prices below $10 a barrel last July.
″The market would be back to $18 within a week″ of an OPEC agreement on production cuts, Turner predicted. He said prices might even approach $20 a barrel if OPEC stuck to its proposed production quotas and the Northern Hemisphere was hit with a severe cold snap this winter.
Besides the production issue, OPEC had yet to decide how and when it would attempt to reconstruct its former system of fixed oil prices. That system, under which all members are tied to an agreed price scale, was abandoned a year ago in an attempt to boost OPEC’s oil sales.
The OPEC oil ministers have agreed they should aim for a price of $18 a barrel. Yet it remained uncertain whether they could agree on the details of a complex formula for fitting their dozens of different grades of oil into a uniform pricing scale.