Oil Buyers Concede $25 Barrel Fairgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Oil Buyers Concede $25 Barrel Fair By Richard Mably Nov 19 10:38am ET
RIYADH (Reuters) - Leading oil consumer nations failed Sunday to get immediate relief from high fuel costs as OPEC producers held a firm line denying extra supplies this year. Ministers homed in on a $25 barrel ``fair price'' for crude -- but stopped short of putting it in writing.
Petroleum importers and exporters said they wanted stable prices. They made little headway though in two days of talks on how they might smooth the wild price swings that over the past two years have first stunted investment in producers' supply capacity and then slowed economic growth in the West and Asia.
``They have not made a commitment to increase production at the next OPEC meeting (in January),'' U.S. Energy Secretary Bill Richardson told Reuters in an interview after the forum gathering 56 nations and intergovermental agencies.
Saudi Oil Minister Ali al-Naimi said consumer nations would have to wait. ``It is only reasonable to await the impact of at least the last two increments,'' Naimi said of this year's previous four OPEC supply increases.
``Saudi Arabia has always said and continues to say we are ready to produce what it takes to bring market stability.''
At least the West received guarantees that Middle East producers will not consider another 1970s- style embargo and retaliate for Israeli killings of Palestinian by denying supplies.
``In the discussions this morning, there was a general view that oil would not be used as a weapon. We were encouraged by those statements. We see no evidence of any linkages between the Middle East situation and oil supplies,'' said Richardson.
$25 SEEN AS FAIR PRICE
Oil prices, set by dealers on futures markets in London and New York, have been running at more than $30 in recent months as a result of low inventories and fears over heating oil shortages in the West this winter.
Prices since the 1990-1991 Gulf War have averaged nearer $18 and OPEC has targeted $22-$28.
Saudi Oil Minister Ali al-Naimi said there was now ``no big difference'' between the two sides on what constitutes a fair price for oil.
``Generally I would say that $20-$25 is attracting both producers' and consumers' strong support,'' said Richardson.
That marked a change of tack for the United States which at previous such gatherings has refused to discuss prices to avoid allegations of market interference and price fixing.
``There's no danger of inflation with an oil price of $25,'' said French Industry Minister Christian Pierret.
Suspicions remain among importers over OPEC's intentions for prices.
``We've heard about (OPEC's target) and we know it doesn't work,'' said Dutch Economics Minister Annemarie Jorritsma. ``Can we really fix the price and do we really want to? All we can really agree is that the market doesn't fluctuate between $10 and $35,'' she told reporters at a briefing.
Delegates said that while there was common ground between the world's biggest importer, the United States and Saudi Arabia, the largest supplier, there was a greater divide between smaller players.
``Let's face it, countries like India need import prices as low as possible while smaller producers with no extra capacity want to squeeze out every penny possible,'' said a delegate from one major consumer nation.
FUEL DEMAND CLIMBING, INVESTMENT NEEDED
While formal agreement on price and production remained elusive, the two sides agreed that huge investment was needed to fuel unrelenting world growth in demand for oil, particularly transport fuels.
The International Energy Agency's Executive Director Robert Priddle said petroleum was expected to maintain its 40 percent share of the overall energy market to 2020, generating demand for more than a doubling of exports from Middle East OPEC nations.
Formal discussions on data transparency masked distrust over how far producers are likely to go in supplying statistics for timely calculation of industry inventory levels.
``If Saudi Arabia and the others come up with supply data that will help a lot but there's a long way to go before that happens,'' said an official with one intergovernment agency.
Saudi has proposed a permanent secretariat in Riyadh to maintain dialogue.
Japan will host the eighth producer-consumer forum in 2002
-- Martin Thompson (email@example.com), November 19, 2000