Opec President Shaikh Ahmad Al Fahd Al Sabah said yesterday he will propose the cartel raise its output by 500,000 barrels per day when the group meets in September in an attempt to help cool oil prices at record highs. Posted on 08/31/2005 1:11:50 AM PDT by M. Espinola
Opec President Shaikh Ahmad Al Fahd Al Sabah said yesterday he will propose the cartel raise its output by 500,000 barrels per day when the group meets in September in an attempt to help cool oil prices at record highs.
Shaikh Ahmad, also Kuwaiti oil minister, said he will also propose a 500,000 bpd increase in the group's official output ceiling at the September 19th meeting.
"We hope that the resolution to the board to increase production and the ceiling, 500,000 (bpd) and 500,000 (bpd), and to refresh the dialogue with all the main consumers, I hope this will at least help the market and the prices to be more stable," Shaikh Ahmad said.
"The market is well supplied," Shaikh Ahmad said and added: "There is about or over one million bpd (oversupply) in the market. If we talk about demand and supply and other economic factors I don't think prices will reach $100 or even deserve to be near $70."
"But if we talk about other issues or realities which play a role in the price increases like geopolitics, refinery problems or psychological problems... then prices may cross $100."
The 10 Opec members subject to cartel quotas, excluding Iraq, are already pumping close to capacity.
"Opec 11 is producing over 30.4 million (bpd) and you can have two million for Iraq, then Opec 10 is at 28.4 million," Shaikh Ahmad said. Opec's official output ceiling is 28 million bpd.
Opec had some one million bpd of spare output capacity, mostly in the hand of its leading producer Saudi Arabia, which could supply the bulk of the proposed hike, the minister said.
"We are allowing the stocks to be build, and we are even allowing them to be build over 56 days (of forward cover) and even with that the prices are increasing," he said. "For that I think it is not Opec's responsibility although we have to work in close cooperation with consumers to solve the problem."
In PARIS: Oil prices shot past the 70-dollar-a-barrel level yesterday as a powerful hurricane bore down on crude-producing regions of the US, prompting concerns for the world economy, which until now has weathered the surge in oil rates.
Some analysts are now predicting that prices could aim for the once unthinkable $80 a barrel — a level economists fear could severely dent consumer demand and curb business activities.
New York's main contract, light sweet crude for delivery in October, touched a high of $70.80 in Asia yesterday morning on news that Hurricane Katrina was swirling close to the heart of US production and refining operations around New Orleans.
After the hurricane was downgraded a notch lower from a maximum category five storm, the benchmark futures contract was trading at $69.08 a barrel, up $2.95 from its close of $66.13 in the US market on Friday. The price was more than double levels at the end of 2003.
The effect on prices of the hurricane has been intensified by an unexpected fall in stocks of petrol in the US as well as anxiety in the wake of geopolitical friction between Iran and the west.
Market experts warn that the 80-dollar level could be approached because efforts to strike a balance between supply and demand have been complicated by sharply inadquate refining capacity, notably in the US.
The Organisation of Petroleum Exporting Countries, which accounts for about 40 per cent of global oil output, has launched an offensive to convince market players that there is in fact no supply squeeze. "We don't have a shortage today, what we have is concern, and also we have problems ... refining," said Adnan Shihab-Eldin, the acting Opec Secretary General and research director. "That has been the main problem in the last couple of years. Remember there has not been much expansion in the refining system for the past 20 years," he told the BBC.
"We expect again additional capacity from Opec and outside Opec to exceed demand growth. Therefore I expect prices sooner or later will begin to come down to levels that reflect fundamentals, not the levels that we are seeing today. I would be surprised to see prices to continue to go up."
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My wife worked for Texaco Oil for thirty Years. Texaco has been trying to build new refineries. The EPA and environmental groups have hand-cuffed the majors. Why do some people not understand?
Tell them not to bother since we have all that CA oil from our federal waters off the Pacific coast....yes, that's wishful thinking since the energy hogs on our west coast don't contribute a drop of the oil they use on their long daily commutes. When 50% of our gasoline is affected by a Gulf coast hurricane, one wonders what in the world this country is thinking when it concentrates our energy dependence in this precarious area of our coast line. I think after 60 years, our government could have come up with a better idea. If there is a shortage, the first strict rationing should be in CA, WA, and OR. Let those smart leftists and environazis do without gas and open airports for awhile. They might get some sense.
The point is Washington must act now before this thing becomes worse
I do hope by that comment you mean for the government to remove all additional taxes and regulations they have imposed on the oil industry and not that they should get more involved. Things are bad enough as it is without more government involvement.
Why hasn't Pres. Bush written an executive order reducing fuel types to three formulas, instead of the current 40+ formulas bottlenecking refinery capacity?
The economy is going to take a big hit. president Bush better put pressure on Opec. Rising gas prices have not hurt that much yet, but now the prices have reached the point where they will start hurting average Americans, and we will have inflation. Two things that made the 70's absolutely miserable in economic terms. My husband works for GM-there are union, global trade problems, but Ford is firing-not laying off-firing management now. The car industry is the first to feel the effects of this and the last to recover.
Who is talking about ANWAR? As far as I can tell, there isn't a single Republican aware of our need to open ANWAR, now. Maybe it's all about the "new tone?"
It would sure lessen the load on the refineries.
drilling in ANWR has passed the House many times and surprise guess who is bottlenecking it in the Senate?
Yep your fireindly enivorwhacko democrat. House and Senate leaders are going to atttach ANWR drilling to budget bills so that it only needs 51 votes to pass the Senate.
People always say this...The technology is not there. There has never been a viable tech solution to oil problems. The economy will take a huge hit. It would collapse. Can you picture American businesses changing all the factories. It would cost a huge amount of money. This while they must compete globally. One of the reasons this has happened is China is taking much more oil than they use to. Opec does not have to depend on us anymore so it is hard to put pressure on them. We need to build more refineries and get rid of the EPA regs that require 40+ different types of gas. I have friends that bought those little hybrids. They tell me the gas mileage is no where near what was promised.
Yes, I know, but which Republican is out front rallying American outrage against this obstructionism?
I don't need specific...But drop Federal taxes temporarily would help...Or at least talk about it...Kind of hard to defend George for doing completely nothing, isn't it???
You wouldn't defend Bush if he twitched his nose and gas was 25 cents a gallon.
We had 8 years of Clinton doing nothing about the energy situation and 4 years of democrat obstruction with the energy bill, which finally passed.
This situation was caused by neglect and it ain't going to be solved tommorrow, but this oil and gas situation may be a blessing in disguise in that it finally ushers in domestic energy alternatives.
"White House" to tap SPR... per Energy Secretary...
"And there's 'nothing George can do' (according to George) except count his money..."
Yeah, right. Sure. Take the tin foil off your head.
Maybe if the envirowhackos were shipped to some of the more radical Islamic OPEC nations all the anti-American trouble makers would be 'over there'.
This is an interesting article on world-wide deposits of Oil Shale
Don't confuse them with facts.
The only problem with that is at this point for a true $60 a barrel price the speculative futures market will need to be between $80-90 dollars a barrel.
I think that is why there isn`t that much talk of shale oil yet.Oil companies don`t believe the price will stay this high forever.
Washington could greatly assist the energy consuming publics financial burdens by greatly cutting taxes at the pump. The states should do the same. I agree there are far too many EPA regulations.
The other looming problem is what to do about nuclear Iran. Removing the mullahs controlled dictatorship would greatly assist our troops in Iraq. Syria's infiltration of killers into Iraq must also be firmly addressed.
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