OPEC INCREASES OUTPUT ENOUGH TO KEEP PRICES STEADY
VIENNA 21 June (IPS)
Oil Ministers of the eleven-members Organisation of Petroleum Exporting Countries (OPEC) agreed Wednesday in Vienna to increase their global output by 708.000 barrels per day to help stopping the more or less inexplicable raise in crude prices in world markets ministers expected to raise production limits only marginally, oil prices soared to a 31/2-month high yesterday on US markets.
Contrary to previous meetings where it would take days to come to an agreement, this time the decision was taken quickly, as Iranian and Saudi ministers had, hours before the start of the meeting, iron out an understanding between them, as they have done before in March.
In fact, Mr. Ali al Na'imi of Saudi Arabia Mr. Bizhan Namdar-Zanganeh of Iran, OPEC's two largest producers, cleared a potential hurdle to a consensus by forging Tuesday what Iranian Oil Minister described as a ''common position'' on whether and by how much to boost the group's output.
Mr. Namdar-Zangeneh told reporters that his country would participate in a production increase.
With the new out put, the Organisation total production would now stand officially at 25.4 millions barrels per day (bpd) but practically it will be a little more than 26 mbd as most of the producers, particularly in the Persian Gulf, outperforms their official quotas.
Iranian analysts told Iran Press Service that though the increase is a little more one was expecting, around half a million bpd, yet it is still insufficient to beat the current high prices for crude and gasoline.
OPEC officials and analysts were divided about the continuing price rise as usually with the start of warm season in Europe price tends to decrease.
Though independent analysts put the blame on shortage of offer, mainly by OPEC, but Iran and other OPEC experts insist that the situation reflects the gasoline shortage in the United states markets.
US officials and the Paris-based International Energy Agency, the West's oil market watchdog, say low stocks are to blame. They want Opec to agree to a much larger increase than 500,000 barrels a day.
Experts said while an additional increase of more than one million bpd in OPEC's global output would get the price going down, "anything less" would not bring much change, as the buoyancy of Western economies and the start of the two months-long summer holidays where millions of people take on the roads would call for more oil.
OPEC Ministers reached agreement without any overt pressures from Washington or other major consumers, contrary to what one had seen in March when US's Energy Secretary Bill Richardson would travel to most producers capitals to push them for a substantial increase in the production, using menaces at times, upsetting many producers.
Explaining why OPEC failed to implement its automatic price control mechanism, Saudi Oil Minister said it was not possible to put the mechanism at work sine the Organisation was going to meet shortly
The informal agreement, reached out last March, enables OPEC to adjust volumes up or down by 500,000 barrels a day if the 20-day moving average of a basket of crude oil streams moved outside target range, which happened two weeks ago.
However, experts warned about prices higher than 25-27 US Dollars per barrel as not only the OPEC producers would have to pay more for what they buy from the West, but countries like Iran that import mostly from Europe and Asia will have to pay even more due to the weaker Euro and other currencies against the Green back. ENDS OPEC 21600
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