High oil prices result of imbalances - Mexico

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High oil prices result of imbalances - Mexico

September 9, 2000 8:35am Source: Reuters

BANDAR SERI BEGAWAN, Sept 9 (Reuters) - Mexican Finance Minister Jose Angel Gurria said on Saturday high oil prices were a result of the limited capacity of producing countries to boost exports to meet the needs of a strong global economy.

``Today you have a fundamental structural imbalance in terms of supply and demand with many of the countries at or very close to full capacity, with their own economies consuming more oil and therefore having less capacity to export,'' Gurria told Reuters.

``You only have countries like Saudi Arabia which can increase the supply. You no longer have a situation where the price of oil is a result of a group of countries deciding they're going to curtail supply and artificially pump up the price,'' he said.

Gurria, attending a meeting of finance ministers from the Asia-Pacific Economic Cooperation (APEC) group in Brunei, expressed scepticism over whether there could be any consensus over the issue of boosting supply either within the Organisation of Petroleum Exporting Countries (OPEC) or within APEC.

``And nobody was going out trying to pass the sombrero around to help producing countries when it was at $9 per barrel and that was only a year-and-half ago,'' he said.

Several APEC members have voiced concern about the potential impact on growth and inflation if oil prices stay at decade highs but there is little consensus on the issue within the grouping, which includes both major oil producers and consumers.

OPEC, which controls most internationally traded oil, is due to meet in Vienna on Sunday amid expectations it will decide to raise crude output by about 700,000 barrels a day.

But many oil traders doubt that will be enough to bring crude oil prices down significantly from decade-highs.

Mexico, though not a member of OPEC, has operated a parallel policy of supply restraint to support world oil prices.

Gurria indicated Mexico would not alter budget assumptions even if oil prices remained high.

``We will always try to be conservative and therefore err on the side of caution because we have had the experience of having forecast high prices that did not materialise,'' he said.

Mexico has budgeted an oil price of $16 a barrel for 2001. ^ REUTERS@

http://finance.individual.com/display_news.asp?doc_id=RTI09a8383reuff&page=news

-- Martin Thompson (mthom1927@aol.com), September 09, 2000

Answers

Say what? $16 a barrel? Looks like they
won't have a budget for oil next year.

-- spider (spider0@usa.net), September 09, 2000.

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