OPEC calls emergency meeting
OPEC calls emergency meeting
Reuters, Dubai/Kuwait/London
OPEC producers on Wednesday called an emergency weekend
meeting to decide how much more crude to pump to prevent a long-
running strike in Venezuela and a looming war in Iraq causing an
oil price shock.
The Organization of the Petroleum Exporting Countries (OPEC)
said oil ministers will meet on Jan. 12 in Vienna after a 25
percent rise in prices in the past two months.
Kuwait's Oil Minister Sheikh Ahmad al-Fahd al-Sabah said
ministers were discussing an increase of 1.0-1.5 million barrels
per day, a rise of four to seven percent on limits now of 23
million bpd.
"There are two proposals. One million barrels per day and 1.5
million barrels a day," the minister told reporters in Kuwait.
"We would favor raising by one million and would agree to 1.5 if
necessary."
OPEC wants to bring prices back inside its US$22-$28 target
band, a range it feels does not threaten world economic growth.
"The world has tried everything to boost growth without much
success and if oil prices stay high we're in for another year of
very slow growth," said Mehdi Varzi of Dresdner Kleinwort
Wasserstein.
Oil has retreated from a peak of $33.65 a barrel for U.S.
crude since the end of December when it was first revealed that
OPEC was discussing a substantial output increase.
"They're trying to prevent panic on the oil markets. Most in
OPEC are resigned to a war in the Gulf," said Varzi.
In Wednesday trade, U.S. crude eased another 73 cents to
$30.35 a barrel and London Brent blend lost 73 cents to $28.60.
The cartel's most influential producer Saudi Arabia is pushing
for a big increase while most other countries, including Kuwait,
Algeria and Libya, prefer an addition of one million barrels
daily.
The group, which pumps about 60 percent of world oil exports,
wants to plug a 2.7 million bpd supply gap from Venezuela, where
a strike against President Hugo Chavez is in its sixth week.
Loss of Iraqi supplies in the event of a U.S. military attack
to oust President Saddam Hussein would remove another two million
bpd from the 77 million bpd world market.
"It is a difficult situation we are in, since we are dealing
with a market affected by a set of extraordinary circumstances
that are beyond our control," said OPEC Secretary-General Alvaro
Silva.
Many in OPEC already are pumping at, or close, to capacity.
Only Saudi, the United Arab Emirates, Iran and Nigeria can add
volumes among the 11 member group, Varzi said.
Shippers and oil company sources said Riyadh already has lined
up more crude sales to the United States, Venezuela's largest
customer.
Meanwhile in London, world oil prices extended losses on
Wednesday as the OPEC cartel prepared to lift exports to cover a
shortage from a prolonged strike in Venezuela.
International benchmark Brent crude oil fell 43 cents to
US$28.90 per barrel by midday in London, bringing the week's drop
to seven percent so far.
U.S. crude futures fell 39 cents to $30.69.