Gulf Arab states ready for second round of OPEC cuts

Apr 26, 1998 02:00 AM

Leading Gulf Arab states in the Organisation of Petroleum Exporting Countries, weary of low oil prices, signalled their readiness to cut exports again.
With prices stubbornly staying close to their lowest level in nine years, some of the world's most powerful oil states have raised the prospect of a further round of output cuts when OPEC ministers meet again on June 24.
Qatar, Kuwait and the United Arab Emirates said they supported calls for OPEC to boost prices by stemming flows to the industrialised world.
"I support every effort to protect the oil price even if it is a cut, and whatever the cut may be I will support it," Qatar's Oil Minister Abdullah bin Hamad al-Attiyah told.

Attiyah spoke after OPEC President Obeid bin Saif al-Nasseri had told that the 11-member cartel would consider further output cuts if prices remained in the bargain basement and provided non-OPEC producers were willing to reduce supplies.
The size of the potential cut was not determined but would be on a "pro-rata basis," meaning OPEC states and those producers outside the group ready to trim supplies would implement the same percentage cut in output.
"If the oil price stays where it is now there will be a lot of talk about further cuts and we don't rule out any possibility. If it is necessary I think this can happen," Nasseri, who is also oil minister of the United Arab Emirates, said.
"We have some news that's saying, or demanding, further cuts but what level or volume has to be taken from the market, this is something that has to be discussed further...Cuts would depend on the future direction of oil prices and the response of non-OPEC producers," Nasseri said.
The oil minister of Saudi Arabia, Ali Naimi, earlier said that further cuts by OPEC and non-OPEC producers were possible if necessary. "...there is a positive trend of commitment among the producing countries and...there is a willingness to cut more volume if need be," Naimi told.
Saudi Arabia had not changed its position, a Gulf source said: " It's still the case." Kuwait Oil Minister Sheikh Saud Nasser al-Sabah added to a call for cuts if prices failed to pick up ahead of the OPEC meeting in Vienna. "...there must be concessions or sacrifices...to lower production...and balance supply and demand," Sheikh Saud said.
Sheikh Saud, who became oil minister recently, said Kuwait could face an "economic catastrophe" if the price of the country's crude remained at $ 10.50 a barrel.
Non-Arab Iran - OPEC's second largest producer - has traditionally supported moves to restrict supplies to underpin prices. The Islamic republic is expected to back any move in Vienna to turn down producers' taps.
The secretary-general of the Organisation of Arab Petroleum Exporting Countries (OAPEC) Abdul Aziz al-Turki has said that oil markets were in imbalance because of high supply and low demand. "There is nothing that might be considered a major solution, but we can agree on some measures that would balance the international oil markets," al-Turki told.
Any OPEC production cut would be the second time this year that the group has cut supplies in an attempt to turn prices around.
During an emergency session last month, OPEC sealed cuts of 1.245 mm bpd effective from April 1.
But despite the promised cuts from OPEC and non-OPEC producers, oil prices have remained weak. Brent traded close to $ 25 a barrel in 1997 and was quoted at around $ 18 this time last year. At this moment benchmark Brent crude in Europe is trading at around $ 13.60 a barrel as traders are waiting for evidence that the reductions secured under last month's so-called "Riyadh pact" would materialise.

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