UAE and Saudi open to decision to hike output

VIENNA — The oil ministers of Saudi Arabia and the UAE said yesterday they were receptive to an Opec decision to increase its output quota in an attempt to control soaring oil prices. Saudi oil minister Ali Al Naimi, speaking upon arriving in Vienna ahead of tomorrow’s meeting of Opec, said he would support a decision to increase the group’s output quota from the current 28 million barrels a day level as a way to help consumers.

By (AP)

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Published: Sun 18 Sep 2005, 10:59 AM

Last updated: Thu 2 Apr 2015, 5:50 PM

"We have to discuss it, but support it — absolutely, yes,” he told reporters. Naimi gave no indication of the size of a possible increase of output quotas. Saudi Arabia is the largest producer in Opec and the world’s largest exporter. Naimi said that Saudi Arabia has not seen increased demand for crude. "We have offered up to 11 million (barrels a day), but have had no response whatsoever,” Naimi said. Asked why Opec was considering a quota hike now, Naimi said market conditions could change ahead of the next scheduled Opec meeting in December.

"You have to look forward beyond today — a lot can happen,” he said. Opec members might take a decision to increase production to calm oil markets, said UAE Oil Minister Mohammed bin Dhaen Al Hamli, speaking in Abu Dhabi. He said the UAE would support the increase if there was an unanimous decision among the members. With prices about 50 per cent higher than a year ago and motorists feeling the increase at the gas pump, the ministers have repeatedly said that Opec is concerned and are doing all they can to keep the market well-supplied and prices stable.

At the meeting tomorrow, Opec is widely expected to increase the production ceiling by 500,000 barrels a day. Previous Opec moves have done little to ease market fears over supply. Production outages caused by Hurricane Katrina, continued instability in Iraq and the upcoming winter season have put pressure on prices, with crude reaching over US$70 a barrel in the aftermath of the storm. Crude oil futures have dipped. A barrel of light crude settled at US$63, down US$1.75 cents, in trading on the New York Mercantile Exchange on Friday.

Katrina slammed into the US Gulf Coast, a major oil production hub, at a time when producers worldwide were already struggling to cope.

The storm was blamed for the evacuation of more than 700 offshore platforms and rigs. Several Gulf Coast refineries in Katrina’s path have shut down or reduced operations, taking out eight per cent to 10 per cent of the nation’s production capacity, according to company and federal reports. In response, the International Energy Agency this month agreed to release two million barrels a day of crude oil, petrol and other fuels on to the world market from their strategic stockpiles over the ensuing 30 days.

That is equal to about 2.4 per cent of the world’s daily fuel consumption. Crude oil makes up around 65 per cent of the supplies released. Record high gasoline prices led Opec to cut its 2005 world oil-demand forecast by 150,000 barrels a day. In Britain, drivers lined up at retail stations after threats of fuel price protests caused worry about gasoline shortages. On Tuesday, Britain’s Treasury chief Gordon Brown called on Opec to boost oil production and proposed coordinated international action to stabilise oil markets.

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