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Last Updated: Monday, 15 March, 2004, 16:40 GMT
Opec defiant as oil prices rise
Oil worker
A combination of factors is forcing up prices
Nigeria and Venezuela have called on fellow members of the Opec cartel of oil producing nations to raise their target price band for crude oil.

The two are arguing that the weaker dollar is hurting them as producers of dollar-denominated commodities.

Opec ought now raise its target price range from the present $22-28 a barrel, a senior Nigerian official said.

With prices standing much higher than that for several months, that pledge already looks hollow to oil consumers.

Brent crude, the world benchmark, was trading at $32.80 a barrel in London on Monday afternoon, up 56 cents on the day.

For all but one day of the past four months, prices have been well above the $28 upper limit of the Opec price range.


When it introduced the range, Opec said it would lift or cut oil production as appropriate if prices were above or below the range for 20 consecutive trading days.

By failing to do this, Opec has ratcheted up the pressure on the world's major oil consumers.

Its plans also call for an output cut of 1 million barrels a day from 1 April, to maintain prices.

Nigeria's appeal came from Edmund Daukoru, who is an energy adviser to the Nigerian president. He said changes to the price band were needed because of "a new equilibrium emerging" in the world economy.

He pointed to the "weakening dollar", implying that oil producing countries, many of which are developing nations, are getting less for their dollar-denominated oil exports, and to a more robust world economy that could support higher prices.

Mr Daukoru suggested that a target price of $30 a barrel would be more sustainable.

Al-Qaeda fear

Venezuela's energy minister also said the issue of raising the target price band should be on the agenda of Opec's next meeting on 31 March.

"We have to discuss that. We don't have a formal proposal but the market situation is changing," said energy minister Rafael Ramirez.

Venezuela's President Hugo Chavez has previously proposed a new $25-32 a barrel range.

Opec members produce about 40% of the world's oil supplies and are sitting on three-quarters of global proven reserves of oil.

Oil prices have been pushed up a shortage of petrol stocks in the US ahead of the summer season, when consumption is driven up by Americans taking to the roads.

But fears about political instability sparked by possible Al-Qaeda involvement in last week's bombing in Madrid that took at least 200 lives are also expected to keep prices high.

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