CAIRO, 16 March 2004 — Members of the OPEC group stood yesterday by a pledge to slash oil production in April, despite soaring oil prices that have triggered complaints from consumer countries.
Their stance pushed world prices up, to $32.42 a barrel for April delivery of benchmark Brent North Sea crude in London at around 1100 GMT.
On the New York Mercantile Exchange (Nymex), the light sweet crude contract for April delivery was at $36.24 in electronic trading before the official opening.
Several OPEC oil ministers insisted at a gas conference here that the oil market was well supplied and that demand in the second quarter would drop because of the end of the winter season in the northern hemisphere.
They also said OPEC should raise its official target prices, because the weak dollar was hurting their economies which depend heavily on oil exports priced in the US currency.
Venezuelan Energy Minister Rafael Ramirez said there was a “consensus” within the 11-member Organization of Petroleum Exporting Countries to slash on April 1 both the official production ceiling and overproduction.
“Are you expecting us to change our decision in April? No. We have the consensus to cut in April,” he told reporters at the end of the two-day annual gas exporters’ conference. “We have the consensus to call for more discipline,” he added.
At a meeting in February in Algiers, OPEC decided to reduce on April 1 its production ceiling from 24.5 million to 23.5 million barrels per day. It also called for removing overproduction from the market, but the leakage continued since February because of the soaring prices. The organization is expected to discuss the decision again on March 31 at its Vienna headquarters.
Ramirez said current prices, close to Iraq war peaks of $37 per barrel last year, are “high ... but for OPEC, it is fair price because the devaluation of the dollar (versus the euro) is affecting our economy.”
Ramirez said support for applying the cut also came from his United Arab Emirates’ counterpart, Obeid ibn Saif Al-Nassiri, who had said Sunday that OPEC could delay the decision if the prices rise very high.
Qatar’s Energy Minister Abdullah ibn Hamad Al-Attiyah said OPEC’s decision “so far” is to proceed with the production cut, adding that no proposal to delay the reduction has been formally put on the table.
He renewed OPEC’s official position that the current prices are not due to a shortage of supply in the oil market, but rather to “psychological factors and geopolitics,” a reference to the political problems of Venezuela and Iraq.
Nassiri did not go back yesterday on the possibility of delaying a cut, telling reporters to wait for the March 31 meeting.
Iran and Nigeria already said they would support a cut. Saudi Arabia was not present at the Cairo conference because it is not a gas exporter.
