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Last Updated: Saturday, 22 May, 2004, 14:11 GMT 15:11 UK
Opec defers oil output decision
A Saudi oil worker watching a well
The Saudi plan to raise output does not have Opec's full support
Opec oil ministers have ended their meeting in Amsterdam without reaching a decision on increasing production.

The oil producers' cartel said it was "deeply concerned" about high prices, but put off a decision on raising output quotas until next month.

Saudi Arabia, Opec's biggest producer, had proposed an increase of more than two million barrels a day, but some members of the group were reluctant.

Policy will now be decided at a full Opec meeting in Beirut on 3 June.

In a statement released after the meeting, Opec President Purnomo Yusgiantoro described the high cost of oil as a "burning issue".

However, he said the price rises were the result of a combination of factors, including "geopolitical tensions in some regions".

He said: "The consultations observed that bringing order and stability to the market is the responsibility of all stakeholders in the industry and called for joint efforts to bring prices down from current high levels."

Commitments

The meeting in Amsterdam was held in response to soaring world oil prices, which had risen to 21-year highs, above $40 a barrel, in recent weeks.

We do encourage and support any proposal to increase the production ceiling level... We believe we ought to try to preserve the stability of the market
Iraqi Oil Minister Ibrahim Bahr al-Uloum

Saudi Arabia's proposal to boost production pushed world oil prices lower on Friday, with Brent crude in London settling at US$36.51, down 75 cents.

US crude was down 87 cents at $39.85 a barrel - its first close below $40 in 10 days.

The Organisation of Petroleum Exporting Countries aims for unanimous decisions before changing its output policy.

Opec's 11 members supply about a third of the world's oil. The cartel has a daily output target of 23.5m bpd, but the group's members are already pumping at least 2m above that level.

New York mercantile exchange, 14 May 04
High oil prices have alarmed global markets

Saudi Arabia, however, could produce a good deal more very quickly.

The kingdom's oil minister Ali al-Naimi has said Saudi Arabia will raise its production to 9m barrels per day from June and could even go up to a maximum of 10.5m a day.

The BBC's economics correspondent Andrew Walker, reporting from Amsterdam, says Saudi officials have also indicated that they have already made commitments to their customers to supply more oil from June.

Our correspondent says the other members of Opec can do little to prevent that happening.

Strong demand

Many industry analysts say that an Opec production increase would probably bring prices down a little.

However, they believe that any price fall would be limited by other factors beyond Opec's control, notably strong demand from the fast-growing economies of China and the United States.

Finance ministers in the Group of Seven - the world's leading industrialised nations - have voiced concerns about the impact of high oil prices. They are meeting this weekend in New York and are expected to call for swift Opec action.

But Venezuela has voiced opposition to any production increase, with energy minister Rafael Ramirez saying on Friday: "We believe that the price in the market has nothing to do with the level of production".

Iran's oil minister Bijan Zanganeh also said "not everything is in our hands" - though he added that Iran, Opec's number two producer, would not oppose the plan to raise output, Reuters news agency reported.




WATCH AND LISTEN
The BBC's Daniel Boettcher
"The G7 wants higher production to reduce prices"



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