Gulf Arab Oil Ministers Hint at Production Increase
Feb 23, 2000 - 04:51 PM By Abdullah Al-Shihri The Associated Press
RIYADH, Saudi Arabia (AP) - Gulf Arab states are leaning toward a slight increase in oil production to lower prices, officials said Wednesday after a meeting of Gulf oil ministers.
In a closing statement, the ministers called for a stable market, but gave little away on what position they would adopt at next month's meeting of the 11-member Organization of Petroleum Exporting Countries in Vienna.
"The ministers stressed their countries' desire to maintain the market's stability in the coming period in cooperation with other producing nations," the statement said.
The skyrocketing price of oil, which has nearly tripled over the past year, has led to spikes in heating oil and gas prices in the United States and prompted calls for the government to tap the nation's Strategic Petroleum Reserve. U.S. officials have also lobbied OPEC and non-OPEC countries to increase oil production to alleviate the high energy costs.
Gulf officials said Wednesday the ministers favored an increase in production of between 2 million and 2.5 million barrels a day to reach a price of between $20 and $25 a barrel. Oil for delivery in April was trading on the New York Mercantile Exchange at $29.39 a barrel.
The officials, who spoke on condition of anonymity, did not say how such an increase should be apportioned among OPEC and non-OPEC member states.
Officials from Saudi Arabia, which towers over its fellow Gulf states as the world's largest oil exporter, said their government favored prices at about $20 to $25 a barrel.
United Arab Emirates oil minister Obeid bin Saif Al-Nasseri also said $20 to $25 a barrel would be acceptable.
However, Kuwait is believed to oppose any production increase. And Iran, the second-largest producer in OPEC, has already come out against a rise in output.
The Saudis are scheduled to meet March 2 with Mexico and Venezuela to discuss whether to increase production. Their decision is expected to influence the OPEC meeting on March 27 in Vienna.
U.S. Energy Secretary Bill Richardson, who is touring the Middle East, said in Cairo on Wednesday that he would be talking to oil officials in Saudi Arabia and Kuwait about increasing production to ease prices.
"We want to see oil prices go down," Richardson told reporters. "I am going to Kuwait and then Saudi Arabia. These are two nations that are very good friends to the U.S. ... It's going to be a friendly, positive discussion. I'm not going there to pressure anybody."
His trip was prompted by U.S. consumer concern over soaring fuel prices. The United States is the world's biggest oil importer.
Richardson refused to say what price he wanted for oil, saying the market should dictate that.
The benchmark Brent price, which is usually about $2 above the price for Gulf oil, was at $26.87 a barrel late Wednesday on London's International for April deliveries, up 29 cents from Tuesday.
The participants at Wednesday meeting were members of the Gulf Cooperation Council: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
At a GCC meeting last year, OPEC members Saudi Arabia, Kuwait, Qatar and the United Arab Emirates and non-OPEC members Oman and Bahrain agreed to cut production in order to raise prices. Oil was then at its lowest prices in decades.
Saudi Arabia and oil giants Venezuela and Mexico then backed major cutbacks in output that were later endorsed by OPEC. The move drove the price up to record highs.
Next month's OPEC meeting is expected to focus on whether to maintain the current restraints beyond March 31, when the agreement expires, or to increase output to cool a bullish oil market.
AP-ES-02-23-00 1635EST ) Copyright 2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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