Oil falls as Saudi pushes for 9pc output increase
www.gulf-daily-news.com LONDON:
Oil prices fell heavily yesterday as leading Opec power Saudi Arabia pushed the cartel for a big two-million-barrel-a-day output increase, nine per cent, to fill a gap left by a five-week-old strike in Venezuela.
US light crude slumped $1.02 to $31.08 a barrel, extending Monday's 98-cent loss. London Brent blend shed 85 cents to trade at $29.35 a barrel.
Leading Opec power Saudi Arabia wants to add between 1.5-2m barrels daily to supplies to stop high prices hurting world economic growth, an Opec delegate said.
Dealers said the additional volumes proposed by Saudi were larger than expected. They would come on top of official limits now of 23m bpd.
But several officials in the cartel expressed scepticism over whether the group would do that much, saying the top end of the Saudi plan looked like a negotiating position.
Most expect an agreement in the range 1-1.5m bpd, the volume Kuwait's oil minister, Sheikh Ahmad Al Fahd Al Sabah, says is favoured.
The group is considering an emergency meeting on January 12 to finalise the deal. Otherwise it could seal the deal by telephone.
Oil has retreated from a two-year peak of $33.65 a barrel for US crude since the end of December when it was first revealed that Opec was discussing a substantial output increase.
The group wants to plug the loss from Venezuela, its third largest member, and restrain prices in its favoured $22-$28 a barrel range.
It is also aware that the growing threat of a US assault against oil producer Iraq could cause a price shock harmful to world economic growth.
Meanwhile, the volume of oil exported by Iraq under UN supervision fell slightly last week to 13.1m barrels, about 1.9m barrels a day, the office of the UN oil-for-food programme said yesterday.
UN Secretary General Kofi Annan approved a plan, worth $4.93 billion, for distributing food and other civilian imports in the current 180-day phase of the programme, which began on December 5.
Last week's sales generated an estimated $369m in revenue, compared with $409m the previous week, when Iraq exported $14.3m barrels of crude, the office said.
l The Opec will hold an extraordinary ministerial meeting on Sunday at its headquarters here, an Opec source said yesterday.