OPEC to bank extra $30 billion

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WIRE:04/12/2000 09:31:00 ET OPEC to bank extra $30 billion from oil price surge-IMF

WASHINGTON, April 12 (Reuters) - Saudi Arabia, Kuwait and other Middle East oil exporters will together collect an extra $30 billion this year in revenues thanks to higher energy prices, the International Monetary Fund said on Wednesday. World oil prices will average about $24.50 a barrel in 2000, up nearly 35 percent from $18.25 a barrel last year, according to the IMF's world economic analysis.

The IMF issued its analysis of the world oil market less than two weeks after the Organisation of Petroleum Exporting Countries agreed to increase oil production by seven percent to ease prices. Crude prices have declined by about $10 from a nine-year peak of $34.37 a barrel in early March.

The new IMF forecast means that worldwide oil exporters would collect about $60 billion more in sales this year. "On a regional basis, the bulk of the higher oil export revenues would accrue to the Middle Eastern exporters, to the tune of almost $30 billion," the IMF report said.

Oil exporters are expected to use some of the extra money to ease spending restraints adopted during the 1997-98 slump in oil prices.

Last year, OPEC nations earned a total of $133 billion in oil revenue. That could soar as high as $211 billion in 2000, according to a U.S. Energy Department estimate last month, based on the assumption that world prices would average $26.62 a barrel this year.

The U.S. government said last week that world oil prices would gradually decline to $23.50 a barrel by the end of this year.

The IMF cautioned that oil prices remain "subject to considerable uncertainty" over the next few months due to both supply and demand factors.

Iraq, which operates outside OPEC agreements because of international sanctions, has said it will ramp up production, but it remains unclear how much more crude the nation will pump. Likewise, it is difficult to forecast whether other nations may reactivate oil fields closed during the price slump a few years ago, the IMF said.

On the demand side, oil-buying nations will see a "modest" impact on inflation from higher oil prices this year, the IMF said.

"The overall inflationary effect of a $5 per barrel price increase is not expected to exceed one-half of one percent in the United States and the Euro area, and one-fourth of one percent in Japan in the first year," the IMF report said.

Demand for oil could decline by one-fourth of one percent in the United States -- the world's biggest oil-buying nation -- and in Japan due to higher oil prices this year, the IMF added. Domestic demand would decline by one-half of one percent in Europe, it said.

http://abcnews.go.com/wire/World/reuters20000412_1436.html

-- Martin Thompson (mthom1927@aol.com), April 12, 2000


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