$ crash hits oil producers’ purchase power
<a href=www.timesofoman.com>Times of Oman, By Our Special Correspondent
MUSCAT — The purchasing power of oil producers has been largely hit by the fall in the value of dollar.
Abdullah bin Hamad Al Attiyah, president of Opec and Qatar’s minister of energy and industry, told the 125th extraordinary meeting of the orgainsation in Qatar that the falling value of the US dollar, especially against the euro was a matter of concern to the global economy.
Attiyah said the fall in the value dollar has negatively affected the purchasing power of oil producers’ revenues. Oil inventories in industrialised countries are relatively tight for this time of the year. This may serve to support oil prices in the coming months.
The conference has reviewed the decision taken on April 24, 2003, to reduce Opec-10’s actual production by two million barrels per day from the levels that prevailed during the events in Iraq, when oil producers increased output so as to assure consumers of steady supplies of crude during that period.
Opec chief said the fact that the cuts came into force on June 1, just 10 days ago, means that they have had little time to work their way through the market’s supply/demand balance, even though their influence on the psychology of the market was noticed much earlier.
“We have seen this reflected in the oil price trends, which has strengthened over the past months and the market is settling down again. However, we are still faced with uncertainty in several key areas,” Attiyah added.
The pace and the extent of the return of Iraqi crude to the market remain unclear at the present time, as this country, with its proud Opec heritage, seeks to re-establish itself on the world energy scene.
He welcomed observers from many leading non-Opec oil-exporting nations — Angola, Oman, Mexico, Russia and Syria — who have so often in the past been supportive to its efforts towards a stable and fair market. The presence of non-Opec countries emphasises once again the need for the co-operation of all parties in the petroleum industry – including consumers — if we are to achieve order and stability.
Harmony and understanding should prevail at all times in the oil market, to help it meet the energy needs of all nations — in a world that is increasingly aware of the importance of stable and secure energy supplies to the process of sustainable development, Attiyah said.
Though there was no decision on any future output cut, non-Opec producers believe that Opec would not allow the 1999 level of $10-a-barrel to repeat and its target of $25 a barrel for a basket of seven crude prices is reasonable.
Over the last six months, Opec member countries increased production significantly to accommodate supply disruptions in Venezuela, Nigeria and Iraq. The Vienna meet in April had reviewed estimated supply/demand levels for the second quarter of 2003 and decided to reduce actual production by 2mbpd (million barrels per day) to 25.4mbpd, effective from June 1.
The aggregate production levels for Opec-10 (Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela) has changed even more than one occasion.
Having reviewed the current oil market situation, as well as supply/demand prospects for the second half of the year, yesterday’s conference noted that stability had been maintained in the market following the decision taken by the conference in April 2003 to reduce actual production to 25.4 mbpd with prices remaining within agreed levels. Nevertheless, the conference also noted that despite the fact that the market remains well-supplied, prices displayed an upward trend, recently, due to the slower-than-anticipated recovery in Iraqi production, coupled with unusually low stock levels. However, with low stock levels anticipated to be replenished during the third quarter, the Conference decided to maintain currently agreed production levels, with strict compliance, and emphasised that continued vigilance in monitoring market developments is imperative over the coming period.