Saudi Naimi says sees no solution in more cuts

Nov 16, 1998 01:00 AM

Oct. 3, 1998 Saudi Oil Minister Ali al-Naimi said that more oil output cuts were not the solution to weak oil prices and that market share was more important.
"We have to maintain this discipline and watch the market because continuous production cuts are not the solution," Naimi said.
Naimi said members of the OPEC had 2 goals -- maintaining oil prices at a reasonable level of between $ 15 and $ 20 a barrel and extending their market share.
"We have to increase our share in the oil market and not to leave the market open for other producers...As a group we can raise our income by increasing our share in the market," the minister said.
Naimi said recent production cuts by oil producers had stopped the deterioration in oil prices, but added, "The question is how to raise the prices."
The minister said a further production cut might lead quota breakers to increase their output.
"Let us improve the adherence because it is not at 100 % now. If we make more production cuts this will help undisciplined countries. We should not give them the chance."
The minister also said an excess of oil on the international market caused by higher production in the past 3 years was likely to be drawn by the end of the year or in the first quarter of 1999.

The oil ministers of Saudi Arabia, Mexico and Venezuela agreed to propose an extension of a current agreement to cut global oil supply by 2.5 mm bpd beyond the original expiry in mid-1999, but stopped short of opening the way for further cuts.
The ministers met in Cancun, Mexico, against a backdrop of a recovery in oil prices from their summer lows, when New York oil futures dropped to as low as $ 11.40 a barrel, the lowest real price since the early to mid-1970s. Benchmark Brent crude was last quoted in Europe at $ 14.39 a barrel.
The historic agreements to curtail world oil production and exports by 2.5 mm bpd, reached earlier this year in Riyadh and Amsterdam, have been credited in part with the recent recovery in oil prices.

Source: not available
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