OPEC chief says more production cuts possible<\/p>\n
SINGAPORE (AFP): OPEC President Obaid Saif Al-Nasseri,
\nlamenting that Asia's economic crisis was beginning to ravage
\noil-producing nations, warned here Tuesday that the grouping may
\nrecommend further production cuts to stabilize world oil prices.<\/p>\n
The Organization of Petroleum Exporting Countries (OPEC) chief
\ntold reporters on the sidelines of an Asia-Pacific oil industry
\nconference that the group will have to discuss the issue at a
\nmeeting in November.<\/p>\n
"Of course all options are open," he said.<\/p>\n
Asked about the options if prices do not improve, he said:
\n"Well, I think going by the state they are (in) now, it might be
\npossible to look for more cuts if prices don't improve."<\/p>\n
He declined to give any numbers on production cuts to prop up
\nworld oil prices now at a 10-year low.<\/p>\n
The price of the benchmark Brent crude for October delivery
\nstands at about US$12.85 a barrel.<\/p>\n
OPEC's average basket price for 1997 was $18.70 a barrel. This
\nyear, it has slumped markedly, hitting a low of $11.90 per barrel
\nin August.<\/p>\n
"The current low oil price environment is unacceptable to our
\ncountries," Al-Nasseri, who is the minister of petroleum and
\nmineral resources of the United Arab Emirates, earlier told
\nparticipants at the 14th Asia-Pacific Petroleum Conference.<\/p>\n
He said that Asia's economic slowdown triggered by a severe
\ncurrency crisis since mid-1997 had drastically slashed oil demand
\nand contributed to plummeting prices.<\/p>\n
"The present economic crisis has impacted upon a huge growth
\narea for OPEC's crude exports; this is, in no way, a traditional
\nstatic market that has experienced a temporary cyclical
\ndownturn," Al-Nasseri said.<\/p>\n
Oil prices fell this year sharply to less than 50 percent of
\nthe average of the last two years and the impact "has been
\nstrongly felt by our economies. "<\/p>\n
"There is clearly going to be an enormous collective loss for
\nessentially single-product economies to absorb," he said,
\npointing out that availability of funds to invest in expanding
\nfuture oil production capacity would be drastically curtailed.<\/p>\n
Al-Nasseri noted that the dramatic fall in petroleum revenue
\nwas being cited as a significant contributing factor to Russia's
\neconomic and political crisis and to economic and social
\nhardships in other oil-producing nations.<\/p>\n
Latin American nations, which include OPEC founder member
\nVenezuela and which have, in recent years, generally performed
\nwell economically, are also experiencing a new wave of economic
\nand financial difficulties, he said.<\/p>\n
Output cuts<\/p>\n
Both OPEC and non-OPEC producers have moved to reverse sagging
\nprices by agreeing on production cuts. To date, OPEC has
\ncommitted to a reduction of 2. 6 million barrels per day with
\nfurther production cuts coming from non-OPEC countries such as
\nMexico, Russia and Oman in excess of 0.5 million barrels per day.<\/p>\n
The reductions have had little effect on international crude
\nprices because inventory levels still remain high, Indonesian
\nMinister of Mines and Energy Kuntoro Mangkusubroto told the
\nconference here.<\/p>\n
Although output from the 10 OPEC members promising cuts has
\nfallen by 1.6 million barrels per day since March, their efforts
\nto support prices are being undermined by poor compliance, rising
\nIraqi exports, weak demand growth and high stocks.<\/p>\n
According to industry reports, only 75 percent of the cuts
\npledged in March were carried out by the end of the second
\nquarter and compliance with the new lower targets for the second
\nhalf of 1998 slipped to only 62 percent in July.<\/p>\n
Many OPEC members have reneged on their pledges to cut
\nproduction, said Ng Weng Hong, editor of the Strategist Oil
\nReport, a Singapore-based petroleum monthly.<\/p>\n
"When Asia was posting explosive economic growth rates and
\nabsorbing much oil supplies, the market could tolerate the
\ncheating by different (OPEC) members but now Asia is not around
\nto save them," Ng said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/opec-chief-says-more-production-cuts-possible-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}