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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Tell me again why we're not drilling in ANWAR?
Seems like our main problem caused by the hurricaine is with the refineries, not supply.
The President should order a national energy emergency and issue a Presidential order to drill everywhere and now. But....Washington will most likely wait around until oil is some how disrupted from the Persian Gulf, Venezuela, Nigeria or all combined before even thinking about doing anything constructive.
Seriously. ANWR would have made up for almost the entire loss of Gulf oil.
Because a bunchof worthless Giai worshipping ecomut hate all progress.
We need far more refineries, well inland, not in areas under sea level (which is insane) or very close to hurricane coastal zones.
The market doesn't believe OPEC claims of adequate supply. The author doesn't explain why refinery problems result in higher crude costs...and doesn't mention that the Saudis are increasingly replacing light, sweet crude with the sour stuff.
My concern over crude oil supplies is with the other Gulf, as in Persian, this winter.
Is ANWR oil heavy or sweet? It is my understanding that we do not have the refineries to process the heavy crude, only the sweet. That is why our Alaska oil goes to Japan for refining. Heard this on WOWO radio last week. We need new refineries built in other spots except for the blue state coastal areas.
Well for one thing the author is based in the Persian Gulf and of course he not going to mention his Saudi comrades are playing 'sour' games.
If you have any links on hand relating to the Saudis pulling that stunt please post in here. People need to be informed about our 'royal' Wahabbist 'allies'.
Gulf states produce 22% of all American produced oil.
Alaska currently produces another 20% with North Slope and Cook Inlet wells.
ANWAR is expected to at a minimum double Alaskan production.
And this says nothing about Alaskan gas, much of which is going to waste till we get the gas line built.
Alaska, working together with big oil has already proved you can drill and pipe oil with virtually zero environmental damage. (This of course does not include California based shipping companies).
Everyone needs to rub their greenie friends nose in this fact. (That is, if any self respecting FReepers have greenie friends). We need to drill, we need to pipe it thru Canada (even if we have to pay them a transit fee) direct to the lower 48. Start now and it will be ready in two years. Wait till the crunch and it will be too late.
Latest news is that the platforms in the gulf made it with very little damage. Refineries and pipelines are currently shut down, and its not clear when they will re-start.
We need to start thinking on a war-time footing. We need to build additional refineries anywhere but the Gulf coast. Why not in the middle of Colorado or Wyoming? Lots of room and pipe-line close to anywhere.
Could China drill 12 miles out in
international waters off the coast of California?
I'm sorry but I don't have any easily available. I believe Simmons talks about it...and Valero stock has jumped like crazy because its refineries can process sour crude.
I don't know whether I'd call the replacement a Saudi stunt. They have no choice. They simply don't have enought light, sweet crude to meet demand.
At 20 bucks a barrel the A-rabs were makeing a good profit...At 70 bucks a barrel the A-rabs are raking in a whopping 1,522,000,000 PER DAY (that's a billion and a half per day) above and beyound what they got at 20 bucks a barrel...
And there's 'nothing George can do' (according to George) except count his money...The Bushs have massive dollar interests in Mid East oil, as well as most members of Congress...
I'd feel better if the station attendant held a gun on me while I pay for the gas...I hate being robbed willingly...
Saudi crude has always been high-sulfer, when compared to Texas or gulf coast crude.
We have to build new refineries that can deal with this, because we've been cherry-picking the sweet stuff too long.
Then they have no right to complain about the price of gas, do they? ;)
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