First Published: 2004-03-30

 
Nuaimi: OPEC will cut production
 

Saudi oil minister says there is enough oil on world market, insists OPEC will maintain production cut.

 

Middle East Online

By Daniel Rook - VIENNA

High oil prices are worrying Bush administration

The high price of gasoline in the United States is not due to a lack of oil on the world market, Saudi Arabian Oil Minister Ali al-Nuaimi said Tuesday, insisting that OPEC would maintain a one million barrel per day (bpd) production cut.

"As far as Saudi Arabia is concerned, the April 1 cut has been implemented," Nuaimi told reporters while he was exercising with a morning jog in Vienna, where the 11-nation Organization of Petroleum Exporting Countries is to meet Wednesday.

It was still unclear, however, if OPEC would carry out the full planned reduction, which had been decided at a meeting February 10 in Algiers.

Oil traders said that although Saudi Arabia was already slashing production deliveries, other OPEC members have been slow to follow suit.

United Arab Emirates (UAE) Oil Minister Obeid bin Saif al-Nassiri said in remarks published Tuesday that OPEC had not ruled out delaying its output reduction.

"Different ideas, including delaying the enforcement of the Algeria decision, will be studied," when OPEC meets, Nassiri told the Al-Hayat newspaper in Abu Dhabi.

But Nuaimi said "the supply of oil has nothing to do with the price of gasoline in the United States," referring to low gasoline, rather than crude oil, inventories in the United States.

The 10 nations in OPEC's quota system decided on February 10 to reduce their total crude oil production from 24.5 million barrels per day (bpd) to 23.5 million barrels with effect from April 1, which is now two days away. Iraq does not participate in the quota system.

OPEC is worried about crude oil prices falling when world demand slumps in the spring.

But OPEC is under pressure from the United States to postpone its cut, with crude prices near 13-year highs.

US gasoline prices near their historic highs are already an issue in political bickering between US President George W. Bush and his Democratic rival John Kerry.

In addition to the one-million-barrel per day reduction from the production quota, OPEC had committed itself in February to remove 1.5 million bpd of excess production by the end of March, bringing the total agreed decrease to 2.5 million bpd.

"We want a stable price. We don't want our economy to be hurt and we don't want the economies of others to be hurt," Nuaimi said.

"Throwing oil on the market is destructive for the international oil industry," he said, adding that he thought there was currently a surplus of oil even if there was a shortage of some types of oil like light sweet crude.

Algerian Oil Minister Chakib Khelil said OPEC should carry through the planned reduction.

"Well, it was done in Algeria, so we'd better keep it up," Khelil said.

He said current high oil prices were "not because of a lack of production."

"Stocks are being replenished. I think you have geopolitical issues and you also have the speculation in the market," causing high prices, Khelil said upon arriving in Vienna.

Oil prices fell amid hints the cartel could postpone its planned output cut.

On Tuesday, oil prices fell in Asian trading, with the New York light sweet crude contract for May delivery at 35.27 US dollars a barrel, down from 35.45 dollars in New York on Monday.

This was still well above OPEC's target range of 22-28 dollars a barrel.

Speaking to reporters on arriving in the Austrian capital, the OPEC president, Indonesian Oil Minister Purnomo Yusgiantoro, said Monday the cartel wanted "to assure the world market that we are going to supply the market".

Analysts have also said that OPEC's reluctance to rein in oil prices is a bid to compensate for loss of revenue due to the weak dollar.

 

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