Crude output to go up

Vienna, March 29. (Reuters): The Organisation of Petroleum Exporting Countries (OPEC) bowed to US pressure for cheaper oil today, agreeing higher output limits that sent petroleum prices into an immediate tailspin.

OPEC won applause from the Clinton administration which said there was now no need to release national emergency supplies to ease election-year political pressure from consumers irate at high gasoline prices.

``This decision was made in the interests of producers and consumers in a prudent way. It will have a positive impact and moderate prices,'' Saudi Oil Minister Ali Al-Naimi said after the conference ended in the early hours of Wednesday morning.

Clinton hails decision

President Bill Clinton said ``these increases will help sustain world-wide economic growth and provide greater balance between oil supply and demand.'' Robert Priddle, head of the West's Energy Watchdog, called the deal a ``step in the right direction,'' but said he was still worried about a shortage of petroleum inventories.

Naimi said OPEC was aiming to keep the price of benchmark North Sea Brent in the range $ 20-25 a barrel compared to a recent nine-year high of $ 32. It did not take long for oil traders to grant the Saudi Minister his wish. Brent futures slumped to $ 24.64 a barrel, down 87 cents in early Wednesday trade.

``We're going to see a stockbuild in the second quarter. I would not be surprised to see Brent at $ 21-22,'' said Gary Ross, head of New York Oil Consultancy Petroleum Industry Research Associates.

In today's agreement, OPEC said nine members, excluding Iran, would immediately turn up the taps by 1.45 million barrels daily, or seven per cent. That relaxes output curbs made a year ago and increases the flows among nine members to 21.069 million Barrel Per Day (BPD). Ministers will meet in Vienna in June to review output policy.

``We will keep the market in balance and it is not only a case of raising production, but also of decreasing production if prices plummet,'' said Naimi.

Iran, the second largest oil producer, complaining of US interference, pulled a last-minute surprise by opting out of the accord, refusing to close the gap between its position on the output rise and the rest of OPEC.

Nevertheless, the Islamic Republic said it would raise production at the allocation in any case from April 1. That will add another 265,000 barrels daily.

Send this article to Friends by E-Mail

Section  : Front Page
Previous : LTTE gain in Jaffna peninsula
Next     : Judge surrenders