OPEC
agrees to remove all its limits on oil sales
AP
Photo/Tatan Syuflana
An Indonesian worker walks on barrels of oil at
a
distribution station of the state-owned oil company Pertamina
in Jakarta.
International
Herald Tribune
NEW YORK
Petroleumworld.com 09 22 05
OPEC
formally agreed on Tuesday to lift all restrictions on its oil
sales for the next three months, a move designed to reassure edgy
markets about the security of energy supplies even as a new hurricane
threatened America's oil and gas heartland.
But,
again, the attention of oil traders and investors was elsewhere.
After climbing on Monday, crude oil prices fell Tuesday on indications
that Hurricane Rita was likely to miss the main oil- producing
areas of the Gulf of Mexico near the coast of Texas.
Following
the two-day meeting, Saudi Arabia, OPEC's largest member, rallied
the oil-producing group to support its 18-month long strategy
to sell as much oil as consumers ask for. The kingdom, which always
keeps some idle capacity to make up for unpredictable production
outages elsewhere, has been pumping above its official production
ceiling since May 2004. OPEC's decision effectively freezes the
group's two-decade quota system, originally designed to prevent
prices from dropping too low, and instead legitimizes a production
free-for-all intended to bring prices down from their record highs.
Because of shortages in U.S. refining capacity, Ali al- Naimi,
the Saudi Arabian oil minister, admitted there might be few takers
but emphasized the decision's psychological impact.
"OPEC went out of its way and offered all the spare capacity
that it has, recognizing that maybe there is no demand, but offering
it so that consumers can feel comfortable that the supply is there,"
Naimi said. OPEC has so far seemed powerless to rein in soaring
prices, which have doubled since the beginning of 2004. Even so,
some members like Iran and Venezuela, were reluctant to back the
Saudi strategy. Both countries, which produce below their quota
levels but do not like to allow more space for Saudi expansions,
are also locked in political disputes with the United States.
Still,
members of the Organization of Petroleum Exporting Countries agreed
to pledge all their remaining extra capacity to the market, saying
they could supply an additional two million barrels of oil a day
amounting to 7 percent of the group's current output. Asked whether
Saudi Arabia would lower its prices to bring more oil on the market,
Naimi emphasized there would be no discounts. "I don't want
to bring it unless the consumers want it," he said. "If
the people don't want the crude, it is better for it to stay underground."
Producers,
including Saudi Arabia, are enjoying record revenue. But they
also recognize that too-high prices might end up crimping demand.
Crude
oil for October delivery on the New York Mercantile Exchange,
which jumped 7 percent on Monday, fell $1.16, or 1.7 percent,
on Tuesday, to $66.23 a barrel.
Vikas Bajaj contributed reporting from New York.
International Herald Tribune 09/21/05
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© 2005 IHT. All rights reserved
