Opec acts to cool oil market
www.dailytelegraph.co.uk By Yvette Essen (Filed: 13/01/2003)
Members of Opec, the Organisation of Petroleum Exporting Countries, yesterday agreed to increase oil output by 1.5m barrels a day in an attempt to ease high prices.
The move follows a 42-day strike at Venezuela's state oil company, which is costing the third-largest oil producing country $50m a day.
Fears over war against Iraq have also pushed the price of Brent crude for February delivery to more than $30 a barrel - a two-year high. Oil supplies to the US are currently down 10pc compared with 2002.
Opec hopes that by increasing its oil output quota for members to 24.5m barrels per day from February 1, prices will return to the cartel's ideal range of $22 to $28. Its 11 members produce around a third of the world's crude oil.
Opec president Abdullah bin Hamad al-Attiyah said: "We are trying to send a strong message to consumers that we are doing our utmost to stabilise the whole market."
He said that because of the Venezuelan crisis over 2m barrels per day had disappeared from the market, but he denied that Opec is trying to take Venezuela's market share. He described the move as a way of "protecting it" and said Opec will reduce the quota once Venezuelan exports recover.
"We will respond very quickly when Venezuela reaches a quantity that will accommodate their market share," Mr Attiyah said.
Venezuela's energy and mines minister, Rafael Ramirez, said he expects production to return to 2.5m barrels a day by next month. "Opec has pledged to defend the stability of the market," he said. "Opec countries committed themselves to defend and support our market share until we can re-establish oil production levels in mid-February."
Mr Attiyah added that Opec could not rule out raising output further, should a war break out in the Middle East. "For sure we'll meet again if there's a war and we'll discuss it and we will take the right decision," he said.
"We will be very close to market and we will see if there is a big shortage for any reason."