OPEC WARNED AGAINST MAINTAINING OIL PRODUCTION LEVEL
By IPS Oil Correspondent
PARIS 25TH Feb. (IPS) The International Energy Agency (IEA) warned the oil producing nations, particularly OPEC that the tightening supply of oil could "feed inflation, slow economic growth and create problems, particularly for developing countries".
In a press release issued Thursday, Mr. Robert Priddle, the Executive Director of the Paris-based Agency also warned that "such instability would be in no one's interests".
Reviewing the current restraints on world oil supply, the Governing Board of the IEA noted that industry oil stocks worldwide were lower at the end of last year than at any time in the past decade. "Yet, demand is constantly growing", the IEA noted.
"We believe that our oil stocks are extremely... dangerously low. If you look at a 24 month period, that is an accurate reflection...The current oil stocks for us are much too low,'' the US Energy Secretary Bill Richardson said in Kuwait.
"The magic word here for us all is the stability of the market for long term prospects,'' Oil Minister Sheikh Saud Nasser al-Sabah told reporters after talks with Richardson.
"We have a vested interest in the economy of the U.S. and we do not want to see any kind of adverse effect to that economy,'' said the sheikh, who served as ambassador to Washington during Iraq's 1990-91 occupation of Kuwait.
In a joint Kuwait-U.S. statement, Kuwait reiterated a commitment to preserve market stability by continuing "to analyze data and production levels to prevent adverse oil price volatility and preserve world economic growth.''
"High prices threaten world economic growth'', added the US Secretary, who is due to push forward similar arguments when he flies to Saudi Arabia Friday and a later visit to key non-OPEC oil exporter Norway.
IEA sounded alarm at a time that that Oil Ministers from the six-member (Persian) Gulf Co-operation Council (GCC) who met Wednesday in Riyadh expressed their satisfaction at the "notable amelioration" of the oil prices, hovering between 28 and 30 US$ per barrel.
Out of the Organisation of Petroleum Exporting Countries (OPEC) eleven members, four of them, namely Saudi Arabia, world's largest exporter, Kuwait, Qatar and the United Arab Emirates are members of the GCC. The two other members of the Council are the Sultanate of Oman, a non OPEC but small producer and Bahrein.
Ignoring Mr. Richardson's warnings against the Vienna-based oil cartel, the GCC Oil Ministers refused to announce an increase in their production level, leaving all decision on that sensitive issue to the next meeting of the OPEC Ministers due 27 March in the Austrian capital.
"The message I'm taking for the oil producer is it is necessary to increase the production and that it is important that there is stability on the market". Mr. Richardson said in Cairo.
The IEA also said it wished to see "reasonable balance maintained between producer and consumer interests".
"To restore stocks by the end of 2000, even to the very low levels of 1999, an early and substantial increase in the production will be needed", the International Energy Agency pointed out.
Reuters quoted other Gulf officials said Wednesday that ministers favor an increase in production of between 2 million and 2.5 million barrels a day to reach a price of between $20 and $25 a barrel. Saudi and United Arab Emirates officials say they favor a price in that range.
But the UAE Oil Minister Obeid Bin Seyf al Nasiri said it would be "foolish" to expect OPEC increasing present production (of 22.976 millions barrels per day) by 2 to 3 millions bpd, estimating as "reasonable" an oil sold at between 21 to 25 US$
Iran, OPEC's second-largest producer, is against a rise in output.
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. ENDS OIL AND OPEC 25200