Saudi Arabia wants OPEC to raise oil output ceiling

Saudi Arabia wants OPEC to raise oil output ceiling

DUBAI (Reuters): OPEC kingpin Saudi Arabia yesterday said it wanted OPEC to raise its oil output ceiling to reflect higher world demand for the producer group's crude.

Influential Saudi Oil Minister Ali al-Naimi said the Organization of the Petroleum Exporting Countries (OPEC) should "adopt a realistic production ceiling" when it meets in Jakarta, Indonesia, in November.

"I think we are going to have a very interesting OPEC meeting in Jakarta in late November. And I believe that there will probably be a desire and hopefully an agreement to raise the production ceiling to a more realistic level," Naimi told newsletter the Middle East Economic Survey (MEES) in an interview.

OPEC meets in Jakarta on Nov. 26 to set crude output quotas for at least the first half of 1998.

OPEC, apart from sanctions-bound Iraq, has not adjusted its self-imposed output quotas since September 1993.

But most producers, with the exception of Saudi Arabia and its Gulf allies Kuwait and the United Arab Emirates, over the last two years have ignored their official restraints and pumped at will.

As a result OPEC supplies reached 27.54 million bpd in September, some 10 percent above the 11-member group's official 25.033 million ceiling, a recent Reuters survey estimated.

"Now I think that, except for a very few, most producing countries, both OPEC and non-OPEC, are producing a their maximum and I hope we can reach an agreement in OPEC which will allow us (Saudi Arabia) to take part in the prevailing high growth in demand," Naimi said.

OPEC accounts for a little more than a third of world oil supplies now running at 73 million bpd.

A Saudi oil official said Riyadh would want a proportionate increase in its quota as part of any higher ceiling.

The official told Reuters by telephone from Riyadh that Saudi Arabia supported an increase of up to 27 million bpd.

Saudi Arabia currently has a 32 percent share in the official ceiling with an eight million bpd quota. If the ceiling were raised to 27 million bpd the kingdom's new quota would rise to 8.64 million bpd.

The official said OPEC needed to set higher quotas in an effort to restore OPEC credibility in world oil markets.

"I think there is benefit to add credibility to the ceiling. The more credible the ceiling, the more credible the organization, " he said.