[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Monday, 6 December, 2004, 22:57 GMT
Oil rises on fears of Opec action
An oil refinery in the US
Rising stocks are taking the heat out of the oil market
Oil prices have begun to climb again on fears that producer cartel Opec is set to cut back production to halt the recent price fall.

Reports of unrest at Shell plants in Nigeria also fuelled Monday's rebound.

US light sweet crude closed trading on Monday up 44 cents at $42.98 while Brent crude traded at $39.65 a barrel, up 29 cents on the day.

Warmer weather in North America and healthier US fuel stocks triggered a 14% drop in oil prices last week.

Opec members are set to meet on 10 December in Cairo.

The sudden fall in oil's value has concerned some Opec members.

Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah told reporters on Saturday that there was too much oil available on the market.

Opec members should go back to quota levels
Hossein Kazempour Ardebili
Iranian Opec governor

"For our part, if this [price] slide will continue as has happened in the past 48 hours, I think we have to... cut all over-production," he said.

Beyond quotas

Estimates suggest that Opec countries - between them the source of about one third of the world's oil - are pumping as much as 2 million barrels a day more than the cartel's quota of 27 million barrels.

Similarly, Iranian officials have made it clear that they want over-production stopped.

"Opec members should go back to quota levels," said Hossein Kazempour Ardebili, Iran's Opec governor.

However, according to Iranian oil minister Bijan Namdar Zanghaneh, Opec is likely to stick with its current production quota and price band when it meets in Cairo on 10 December.

"We feel that there is no consensus to make a change in the price band at the moment. I don't think this consensus will be reached at the next meeting," the minister told reporters on Monday.

Analysts agreed that Opec was unlikely to announced a quota cut this week.

"Opec members still sound as though they would like to cut some oil from the market, but this may be achieved through re-imposing the current quota more strictly than pre-emptively cutting," said Simon Wardell, energy analyst at the World Markets Research Centre.

Out of the range

Opec officially likes the average price of a "basket" of its oil products to stay between $22 and $28 a barrel.

Oil gushing from a pipe at a plant in India
Quota-busting is a fact of life in Opec
The recent gains in oil prices - the record for US light crude was $55.67 in October - have left that far behind.

Opec president Purnomo Yusgiantoro suggested on Friday that a more realistic band would be $28-32, while some members have advocated an even higher range.

The falls had been triggered when the Energy Information Administration (EIA) said on Wednesday that US crude stocks were 3.5% higher than a year ago.

Analysts also attributed the fall to mild early-winter weather, which has tempered demand for heating oil in the US.


Monday's oil price rise was also fuelled by reports that protestors had occupied three oil platforms in Nigeria.

Production of about 70,000 barrels of crude a day has been halted at two occupied Shell platforms, and 75 workers are being held.

"About 200 youths occupied two flow stations, Ekulama 1 and Ekulama II, " a Shell spokesman told the AFP news agency.

ChevronTexaco's Robertkiri platform has also been occupied, Reuters reported, affecting production of 20,000 barrels per day.

There were no reports of violence.

The BBC is not responsible for the content of external internet sites


News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific