27-09-00 OPEC leaders strongly defended their oil policies, blaming high taxes and market speculators for prices that sparked global protests as they worked on a declaration that will call for more cooperation with consumer nations. At the first OPEC summit in 25 years, leaders insisted there was little reason to raise the amount of oil they're producing.
In October, the United States will release 1 mm bpd of oil from its strategic reserve, while OPEC will produce an additional 800,000 bpd, measures that should lower prices. "I don't see why anybody should worry," said Nigerian President Olusegun Obasanjo. "No deficit of crude exists," declared OPEC President Ali Rodriguez. He said crude supply exceeds demand by 2 mm bpd -- and added that some European Union members were quietly drawing from their own reserves.
He declined to reveal who, saying, "I know, but you have to find out." Rodriguez also announced that French Prime Minister Lionel Jospin and Venezuelan President Hugo Chavez had agreed to hold a meeting of OPEC and European Union officials to discuss the oil market. Rodriguez plans to travel to Paris and London before OPEC's own Nov. 12 oil ministers meeting in Vienna, Austria.

While the globe struggles with high prices and shortages of refined products such as heating oil, OPEC is struggling to stick to its so-called "price band" device designed to keep oil at $ 22 to $ 28 a barrel. The crude oil price benchmark that OPEC follows has been trading at $ 29.15, up from $ 29.09, but down from $ 31 in mid September. A different, higher benchmark followed by many in the industry, the spot month contract for light sweet crude, was $ 31.46 per barrel at the close of trading on the New York Mercantile Exchange.
Under the band system, production will increase by 500,000 bpd if oil exceeds $ 28 a barrel for 20 consecutive trading days. A price below $ 22 for 10 straight days will trigger a 500,000 barrel cut daily. OPEC has invoked the mechanism, to little effect. "OPEC does not want the price tobe too high. We want an inherent stability to exist within the price framework of crude oil and also the establishment of a floor which the price of oil cannot fall below," said Nigeria's Obasanjo.
OPEC officials maintain that taxes on gasoline, speculation in futures markets, and bottlenecks in transportation and refining are to blame for high prices. President Clinton's decision to tap the reserves was criticised as a political move to help Democratic presidential nominee Al Gore's campaign. Clinton said he acted because it was "the most prudent thing to do." OPEC heads of state held bilateral meetings, finishing the final draft of a summit declaration of the cartel's long-term goals that will be released.

In addition to encouraging cooperation with non-OPEC oil producers, it reportedly calls for "fair" and stable oil prices and says its officials will formulate strategies to ensure them. Dow Jones Newswires reported that, according to an OPEC delegate, the "Caracas Declaration" will stress the importance of protecting OPEC's interests; encourage continuous dialogue among OPEC, international oil companies and non-OPEC producers; and promote the use of technology to enhance oil and gas production.
OPEC members repeatedly insisted they wouldn't make any production decisions, but participants haven't been able to escape the topic. Chavez even suggested that the top end of OPEC's band system might be raised -- an apparent concession that OPEC cannot act alone. Analysts say stubbornly high oil prices stem from low world inventories and the fact that OPEC -- which churns out about 40 % of the world's oil -- is producing at near capacity.