US steps up pressure on Opec for oil output rise

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US steps up pressure on Opec for oil output rise By Gerard Baker in Washington and Philip Coggan in London Published: September 8 2000 20:13GMT | Last Updated: September 8 2000 23:20GMT

The US on Friday stepped up its pressure on the Organisation of Petroleum Exporting Countries to deliver a large increase in oil output at Sunday's crucial meeting of Opec ministers with a warning that it was "ready to exercise all options" if there was no agreement.

Bill Richardson, the energy secretary, said the world needed lower oil prices and warned Opec leaders that President Bill Clinton was prepared to act to help bring them about.

But Mr Richardson declined to say whether the Clinton administration would release oil from the 570m barrel US strategic reserve in an effort to depress prices should Sunday's meeting in Vienna fail to produce a significant increase in production quotas.

Congress has been pressing the administration to lend oil from the reserve but administration officials have so far refused on the grounds that it would be a misuse of the supply, which is intended only for genuine strategic emergencies.

Mr Richardson's open-ended threat on Friday was clearly an attempt to turn up the heat on Opec without committing to such a controversial move.

The oil price slipped back as Opec ministers gathering in Vienna made reassuring noises about the cartel's willingness to increase production. October Brent crude dropped more than a dollar to $33.19 by mid-afternoon in London.

Traders remain cautious, however, about the scope for oil to fall back to Opec's target range of $22-$28 a barrel given low stock levels and the delays involved in getting extra production to the key US market.

Protests in Europe gathered pace as farmers and truckers in Britain copied some of the tactics used in France during the dispute.

A Shell oil refinery in northwest England was picketed while farmers and hauliers in south west Wales were preparing to mount a copycat protest at refineries run by Texaco and Total Fina at Milford Haven.

In France, the dispute rumbled on. While the government appeared to have persuaded truckers' leaders to accept a deal based on limited cuts in fuel taxes and a compensation system to offset future price rises, many truckers vowed to continue the conflict.

Only a handful of blockades were reported to have been lifted by the evening.

In the US, high prices for petrol and home heating fuel have become an issue of growing importance in the presidential election campaign. Al Gore, the vice president and Democratic candidate, has attacked petroleum companies and his Republican opponent, George W. Bush, for his connections to the oil industry.

The Republicans meanwhile have criticised the administration for failing to tackle Opec's production squeeze last year. Their attacks have been blunted somewhat, however, by the fact that Dick Cheney, the party's vice presidential candidate, called for sharp reductions in oil production last year while he was chief executive of Halliburton, the energy services company.

Equity markets continued their sell-off in part because of fears that higher oil prices would hit corporate profits. The CAC 40 in Paris fell 1.9 per cent, the DAX in Frankfurt was 1.6 per cent lower in late trading and in London the FTSE 100 fell 88.5, or 1.3 per cent, to 6,600.7.

The US equity market also lost ground in early trading Friday in the face of profit warnings from automotive group TRW and semiconductor equipment maker SpeedFam-Ipec.

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3P6UJ9WCC&live=true&tagid=ZZZGXV4R00C&subheading=global

-- Martin Thompson (mthom1927@aol.com), September 08, 2000

Answers

Seems I have seen this story before. I am curious to find out what

'ready to exercise all options' means.

-- Martin Thompson (mthom1927@aol.com), September 08, 2000.


Martin, it's a case of the blind leading the blind. Nobody knows what to do about the shortages. They can't produce their way out of the problem.

The finger pointing is now just starting in earnest.

-- Wayward (wayward@webtv.net), September 08, 2000.


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