Big producers call for 'decent' oil price

Big producers call for 'decent' oil price

Omar Hasan, Agence France-Presse, Riyadh

OPEC kingpin Saudi Arabia and independent producer Norway called Tuesday for a "decent" price for crude to guarantee oil market stability and forecast a brighter economic outlook in the second half of 2002.

Saudi Oil Minister Ali al-Nuaimi and Norwegian counterpart Einar Steensnaes, who arrived in Riyadh on Monday on a two-day visit, told a press conference that all producers wanted to see a "decent price."

Nuaimi said the price should "not be significantly less than 20 dollars and not significantly higher than 20 dollars" a barrel.

Norway, a non-OPEC state and the world's third largest oil exporter, announced in December that it would cut output by 150,000 barrels per day (bpd) between January 1 and June 30 as part of efforts to strengthen prices.

"The prices today are what we expected," Nuaimi said. "What we want is stability in the prices and not movement up and down."

"I believe that the cooperation of all oil producers is helping to lessen wide movement of prices."

The Organisation of Petroleum Exporting Countries slashed production in December by 1.5 million bpd in a bid to lift prices, under a rare agreement with rival non-OPEC oil producing countries which also pledged cuts of more than 460,000 bpd.

Steensnaes said that signs of recovery in the global economy "make us optimistic" in establishing a proper balance between supply and demand.

"We are recovering from the decrease in the oil prices because of the September 11 attacks in the United States, and a mild winter, which caused an imbalance in the market," Steensnaes said.

"We could be more optimistic in the second half of the year because of global and US economic recovery. In the second half, we may suspend the cuts," he said. "We aim at establishing a proper balance."

Nuaimi said he expected the world economy to improve in the second half of the year and the demand for oil to grow. "We believe that prices will improve too," he said.

Steensnaes added that Russia, which said last week that it could boost oil exports from the second quarter of the year if growth resumes in the United States and Europe, also wanted a "decent price" for oil.

"In fact all producers favour this because higher prices will slow down the economy.

"I am confident the Russians assess the situation the same way others do. They promised to stick to their commitment of production cuts," the Norwegian minister said.

Nuaimi said world demand for crude, which currently stands at 76 million bpd, was expected to drop by 1.5 million bpd in the second quarter, but declined to say what action OPEC would take.

"When OPEC takes a decision, we take into account the whole year and not only one season. In every meeting we review our decisions and amend them based on new information," he said.

"Based on the information we have, it's difficult to say what we are going to do at our next meeting" in March, said Nuaimi, adding that "compliance with output cuts now is much better than before."

London Brent futures fell 32 cents to US$21.12 a barrel on Tuesday and U.S. light crude eased 47 cents to $20.94 a barrel but dealers said markets remained panicky after a sharp jump on Monday.

Brent rocketed $1.74 in the last 90 minutes of Monday trade when dealers got wind that Royal/Dutch Shell might take all available physical Brent cargoes for March.

Dealers said Shell had told them it had demand for the entire March Brent program, sparking panic buying among those short of Brent futures.