Momentum grows for OPEC to boost output<\/p>\n
DUBAI (Reuters): Saudi Arabia appeared to have stepped closer
\nyesterday in securing key backing for its proposal to let OPEC
\nmembers open up the taps next year to meet world oil demand.<\/p>\n
United Arab Emirates (UAE), a core Gulf Arab member of the 11-
\nmember cartel, indicated that it saw scope for a higher OPEC
\noutput ceiling in 1998 because of robust demand growth.<\/p>\n
\"The International Energy Agency (IEA) indicated there will be
\nan increase in demand to 75 million barrels per day (bpd). I
\nthink it might justify some change in the OPEC ceiling,\" UAE
\nPetroleum and Minerals Resources Minister Obaid bin Saif al-
\nNasseri told Reuters on Tuesday.<\/p>\n
\"The idea of increasing the ceiling should be determined by
\nworld demand and that will be discussed at the meeting,\" al-
\nNasseri said, referring to OPEC's six-day ministerial meeting in
\nIndonesia later this month.<\/p>\n
Sustained economic growth and moderate oil prices are expected
\nto lift world oil use to 75.6 million bpd in 1998 from 73.8
\nmillion bpd this year, according to the Paris-based IEA, the
\nWest's energy watchdog.<\/p>\n
Al-Nasseri's comments were in line with Saudi Oil Minister Ali
\nbin Ibrahim al-Naimi who this month said a rise in OPEC's ceiling
\nwas justified because of a greater call on the group's crude in
\n1998.<\/p>\n
\"I think the UAE always tries to coordinate with GCC member
\ncountries on their oil business or policy,\" al-Nasseri said.<\/p>\n
OPEC's Gulf Cooperation Council members -- Saudi Arabia,
\nKuwait, United Arab Emirates and Qatar -- account for more than
\n45 percent of the group's current estimated output of 27.8
\nmillion bpd and form a powerful negotiating block in the group.<\/p>\n
There has been no major overhaul to OPEC's quota system for
\nfour years. Analysts have said an increase in the ceiling by some
\ntwo million bpd to up to 27 million bpd would mainly be to the
\nbenefit of key Gulf Arab producers.<\/p>\n
Riyadh's initiative had been prompted by a strategic need to
\nrecapture its share of the global oil market which has fallen
\nmore than half a percentage point since 1994 from 11.66 percent
\nto 11.1 percent, according to IEA demand figures.<\/p>\n
UAE's importance in OPEC and the larger oil market is that,
\ntogether with Saudi Arabia and Kuwait, it is one of the few
\ncountries left with spare production capacity.<\/p>\n
Under OPEC's current ceiling of 25.033 million bpd, the Gulf
\nArab state has an assigned quota of 2.161 million bpd though it
\nhas the ability to pump more than 2.5 million bpd, according to
\nindustry analysts.<\/p>\n
As Japan's main oil supplier, the UAE would be in a position
\nto lift crude exports to the Far East under a higher quota.<\/p>\n
Riyadh would be looking at a new quota of anything up to 8.6
\nmillion bpd from its current eight million bpd if OPEC agreed to
\na pro-rata increase of the overall ceiling to 27 million bpd,
\nanalysts said.<\/p>\n
Oil markets were weaker on Tuesday despite tensions between
\nIraq and the United Nations as traders faced the prospect of more
\noil coming onstream in 1998.<\/p>\n
Traders and analysts are watching closely for reaction to the
\nSaudi proposal from Iran and Venezuela -- the second and third
\nlargest producers in OPEC -- which will be critical to the
\npassage of a higher ceiling.<\/p>\n
Venezuela, the largest volumetric violator of its quota, would
\nin theory gain nothing if the group increased its ceiling by
\naround eight percent.<\/p>\n
Caracas and Tehran have yet to declare their view on Riyadh's
\nproposal. Qatar has said it would accept a decision for a higher
\nceiling though Indonesia has said it preferred a roll-over of the
\ncurrent, but widely ignored, ceiling.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/momentum-grows-for-opec-to-boost-output-1447893297",
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"sponsor": "Okusi Associates",
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