More oil price rises are in the pipeline

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More price rises are in the pipeline Two key nations 'recognise' impact

Post Reporters

Global oil prices continued to hover around 10-year highs yesterday, with Brent crude trading as high as $34.43 a barrel in London trade.

Oil futures for October delivery at the New York Mercantile Exchange reached $35.19 a barrel in early Asian trade, a level unseen since 1989 before the Gulf War.

On the sidelines of a United Nations Millennium Summit in New York, Foreign Minister Surin Pitsuwan said Saudi Arabia and Venezuela had "recognised" that the rising oil prices was hurting the Asian recovery and developing economies.

Both countries had agreed to discuss the concerns raised by Asian nations about the oil price increases at a summit of the Organisation of Export Producing Countries later this month.

Local energy policy makers said increases in retail petrol prices were inevitable.

Viset Choopiban, governor of the Petroleum Authority of Thailand, said Asian markets would be affected if Dubai prices, now at $31 per barrel, gained in line with New York and Brent oil prices.

Every $1 a barrel increase in Dubai and Oman crude oil raised petrol prices in Thailand by 15 satang a litre. If Dubai crude hit $35 a barrel, premium pump prices could hit 19 baht a litre, Mr Viset warned.

Industry Minister Suwat Liptapallop said the state-owned PTT could no longer absorb losses and would be allowed to raise pump prices. The PTT yesterday raised diesel prices by 30 satang a litre to 13.94 baht.

The state oil company had lost 700 million baht since July in subsidising pump prices, recording a loss of one baht a litre of diesel sold and 40 satang a litre for petrol.

PTT officials said privately that the firm was in talks to buy crude from Saudi Arabia and Iraq under UN quotas to cover demand for next year. The PTT currently uses 200,000 barrels of oil a day, equal to one-third of total domestic demand. The deal is expected to cover around 80,000 barrels a day.

Tawee Butsunthorn, chairman of the Federation of Thai Industries, said the government should take new campaigns to encourage energy conservation rather than focus on short-term price intervention.

At the National Energy Policy Office, officials said there was little hope that oil prices would decline soon. Oil demand would remain high as industrial countries built up inventories, energy requirements rose going into the winter months and robust economic growth increased energy needs.

In New York, Mr Surin said he had raised concerns about rising oil prices with Indonesian president Abdurrahman Wahid and Australian premier John Howard.

Mr Surin planned to tackle the issue in his address to the summit today. Indonesian President Abdurrahman Wahid had spoken of "behind the scenes lobbying" with oil producing nations, he added.

Indonesia, together with Malaysia and Brunei, had agreed that oil prices should not exceed $25 a barrel, Mr Surin said.

Moves to raise the oil price issue at the next Asia Pacific Economic Co-operation summit in Brunei in November was also gaining ground.

Mr Surin said the move toward an Apec consideration of the matter was a follow-up to his recent bid to rally a collective stand by the 10 Asean states.

He said it was a key development that major oil producers like Venezuela and Saudi Arabia had agreed that high prices would affect global economic growth and developing nations. But other oil producers, including Nigeria, are resisting raising production unless prices are tied to debt relief.

http://www.bangkokpost.net/today/080900_Business03.html

-- Martin Thompson (mthom1927@aol.com), September 08, 2000


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