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Toby Odone from the Energy Intelligence Group
"Oil prices have tripled"
 real 28k

Wednesday, 8 March, 2000, 06:49 GMT
Oil jumps above $34 a barrel
Oil platform
Pressure is growing on producers to boost output
Oil prices in the United States soared to more than $34 a barrel as President Clinton warned oil producing nations they could pay the price in the long-term for squeezing supply.

The latest rise of $1.95 a barrel, to $34.13, means the price of light crude has risen by 8% since last week.

In London, Brent crude jumped first above $30 and then $31, eventually settling at $31.86, up $2.32.

That is more than three times the price during a supply glut in early 1999. These levels were last seen in 1990, during the Iraqi invasion of Kuwait.

Cuts in production by nations belonging to the Organisation of Petroleum Exporting Countries (Opec) have left global stocks depleted.

The United States is putting pressure on Opec to increase production to meet rising demand.

Diplomatic meetings

It says global consumption is running at about 75 million barrels per day, up from the usual 73 million barrels.

Oil platform
Demand has increased as prices rise
Opec members meet later this month to decide their strategy. Saudi Arabia, the world's top exporter, together with Venezuela and non-Opec producer Mexico, are in favour of an increase in output, but Iran, Libya and Algeria remain to be convinced.

The US has held hastily-arranged meetings with Venezuela and Qatar in an attempt to find a diplomatic solution.

"Sure, I want oil prices to go down some, but the producing countries should want them to go down some, too," said President Clinton.

"What we want are stable oil prices that aren't too high."

But he said oil producing countries had to understand that high prices could hurt them in the longer-term.

"You will either have a big drop in demand... and it will cut the revenues of the oil producing countries below where they would have been if they'd maintained stable prices at a lower level," said Mr Clinton.

"Or you will have a lot of non-Opec members, who aren't subject to their agreement, start increasing their production, taking market share away from them."

Plan to cut aid

There is growing pressure for the US administration to cut off foreign aid, cancel arms sales and take other tough action against Opec to prompt the cartel into producing more oil.

The price rise has also led Federal Reserve Bank officials to express concern about economic growth.

Petrol prices are forecast to rise to $1.80 a gallon if there is only a small production increase.

President Clinton is still considering the release of emergency stockpiles if Opec refuses to pump more oil.

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See also:

08 Mar 00 |  Middle East
Oil producers call for stable market
03 Mar 00 |  Business
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