Oil Prices Go up Before OPEC Emergency Meeting

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Last updated at: (Beijing Time) Thursday, April 17, 2003

Oil Prices Go up Before OPEC Emergency Meeting

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Oil prices on the world market crept higher on Thursday, one week before the Organization of Petroleum Exporting Countries (OPEC) convenes an emergency meeting in Vienna on April 24 to prevent an oil price crash.

US light crude rose 22 cents to 29.40 dollars a barrel, while London's Brent crude was up 23 cents at 25.25 dollars a barrel.

Major oil producers are expected to discuss possible supply restraints to avert a over-supply on the world oil market at the OPEC emergency meeting. Shortly after the US-led war on Iraq brokeout on March 19, OPEC promised to make up for any oil shortage from the war to ensure oil supply.

On Thursday, Iran's Oil Minister Bijan Namdar Zanghaneh urged the OPEC to cut oil production. "We (OPEC) should consider cuttingproduction to balance supply and demand in the market, especially in the second quarter," Zanghaneh told reporters at an industry conference.

He said any reduction in supplies should be made from the group's official 24.5 million barrels per day (bpd) output ceiling. The10 OPEC members bound by quotas are now pumping close to two million bpd above the official limits.

Meanwhile, Indonesian Mines and Energy Minister Purnomo Yusgiantoro also said he would request that OPEC remove 1.5 to 2 million bpd from the world market.

The International Energy Agency, the energy watchdog for 26 industrialized nations, has urged OPEC to be cautious with any supply cut, saying that prices are still too high for firms to rebuild low stocks.

On Monday, OPEC Secretary General Alvaro Silva said that members of the bloc may adjust production quotas, even though there is certain "flexibility."

Silva said production quotas established by OPEC were not to bestrictly complied with and member countries could keep some tolerances.

The war in Iraq had not produced a rise, but a drop in price, caused by an estimated two-million-barrels over-production a day, Silva said.

Since the Iraq war started last month, most OPEC members have been producing at maximum capacity to keep supplies plentiful.

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