JAKARTA, 27 August 2004 — OPEC must take stock of its spare oil capacity before any decision on a possible increase in production quotas can be made at the organization’s meeting in Vienna next month, its president said yesterday.
Purnomo Yusgiantoro told reporters here that non-OPEC oil producers would also be consulted over how to bring down crude prices, which continue to remain high amid market insecurity over supplies.
“We will take stock of the spare capacity we have and we will then discuss whether we can increase our production quota,” said Yusgiantoro, who is also Indonesia’s energy minister.
He also expressed optimism that crude prices, currently hovering around the $44 per barrel mark after touching an all-time high of $49.40, could be reduced by a third from current levels following the Sept. 14 meeting in Austria. “Oil prices have come down and we hope that it can reach the $30 figure, because that is a quite fair figure,” he said. “We will gather non-OPEC producers and oil companies to see what we can do together to stabilize oil prices.”
OPEC nations are currently overproducing in an effort to cool down an overheated market, but Yusgiantoro insists any permanent changes to its production quota must wait until the organization’s September meeting.
Meanwhile, the head of the International Energy Agency said yesterday in an interview that the oil production situation was under control and that prices should ease. “Some oil market worries have been revealed to be overdone,” especially in regard to the political situation in Venezuela and the troubles of Russian oil giant Yukos, Claude Mandil told French business newspaper La Tribune. “The Yukos affair is certainly not over, but I don’t think it will have serious consequences on Russian oil production and exports ... Venezuela was also a source of worries. Everything is not sorted out, but in regard to oil production, the situation is more or less under control. All of that should bring prices lower,” he said.
Mandil said he could not entirely “explain” the recent bullishness in the oil market because “it is partially unjustified insofar as global oil production is greater than consumption.”
“OPEC can’t do much because it is producing at full capacity, with the exception of Saudi Arabia. But the problem is not so much to increase available capacity, since the market needs not more oil, but more confidence and serenity,” he said.
World oil prices fell strongly yesterday for the second day running as worries over supply disruptions eased with traders claiming overnight pipeline attacks in major producer Iraq were unlikely to affect the country’s crude exports.
The price of benchmark Brent North Sea crude oil for delivery in October fell 41 cents to $40.27 per barrel in late afternoon deals, having plunged to $39.67 earlier in the day, the lowest level for almost one month.
The contract had meanwhile shed $1.64 by the close of trading Wednesday.
New York’s main contract, light sweet crude for October delivery, lost 37 cents to $43.10 per barrel in early trading, having fallen to as low as $42.50. The contract had plunged $1.74 dollars on Wednesday.