Venezuelan president's trip aimed at welding OPEC members

Aug 08, 2000 02:00 AM

Saudi Arabia and Venezuela are intent on a stable oil market and will not allow a return of low prices, a Saudi official said ahead of a much-anticipated visit by Venezuelan President Hugo Chavez. Chavez, who is due to arrive to the Red Sea port city of Jiddah will meet with Saudi King Fahd and Crown Prince Abdullah against a backdrop of warnings of an oil price collapse and talk of quota busting among the members of the OPEC.
"The Venezuelan president chose Saudi Arabia as his first stop because of the kingdom's leading role in OPEC," said the official. Chavez' trip is aimed at welding unity among OPEC members and comes after OPEC president and Venezuelan Oil Minister Ali Rodriguez expressed concern over reports that the organisation is leaking an extra 700,000 bpd into the market. "Saudi Arabia wants OPEC to be united and achieve stability in the market," said the official.
OPEC delivers about one-third of the world's oil supply. Its official output is 25.4 mm bpd. Saudi Arabia, the cartel's most influential member, produces almost a third of that. Venezuela, once the group's most notorious quota buster and most apathetic member, has been lobbying for stability in the market through establishing closer ties with fellow OPEC members.

Venezuela was instrumental in engineering production cuts after oil prices hit record lows in 1998 and 1999, lifting prices to 9-year highs and earning Chavez credibility among OPEC countries. OPEC members were angered by Saudi Arabia's announcement last month that it was considering boosting output unilaterally to bring down prices.
Although Saudi Arabia has not officially announced an increase in production, industry sources have said the kingdom raised production by 200,000 bpd in July. During his tour, Chavez will extend an invitation to the leaders of Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Iran, Iraq, Indonesia, Libya, Nigeria and Algeria to attend an OPEC summit in Caracas. Chavez' tour is also significant because he will visit Iraq making him the first foreign leader to pay an official state visit to Iraq since the 1991 Gulf War.

Source: AP via Newspage
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