KUWAIT CITY, 5 October 2004 — Kuwait will pump up to 200,000 more barrels of crude daily later this month, the emirate’s energy minister said yesterday, blaming psychological factors and not supply shortages for the recent oil price rise.
Kuwait is currently producing to its maximum capacity of 2.5 million barrels per day (bpd), but “we will have an additional output of between 180,000 and 200,000 bpd” once Gathering Center 15 returns to operation later in October, Sheikh Ahmad Fahd Al-Sabah told reporters. “Supply and demand is not the reason for oil price reaching these (record) levels,” Sheikh Ahmad said.
“Psychological and political reasons related to terrorism, and the situation in the Middle East and Iraq and in Nigeria ... created fears that led to such skyrocketing prices,” he said.
“OPEC has moved to assure the market by deciding (last month) to hike output by one million bpd. OPEC members (minus Iraq) are also producing two million bpd above the ceiling. But all this has failed to reduce prices,” he said. “The problem is not OPEC and production, but international concern resulting from political factors,” Sheikh Ahmad said.
The Kuwaiti minister called on industrialized countries to help in cooling oil prices by reducing energy taxes.
The Organization of Petroleum Exporting Countries agreed at a meeting in Vienna last month to raise its official production ceiling by one million bpd to 27 million bpd from Nov. 1.
Meanwhile, oil prices slid below the psychologically critical $50 a barrel mark yesterday as tensions eased in Nigeria’s southern oil heartland, where a rebel group fighting for control of the country’s key resource said it had surrendered its weapons.
The price of light sweet crude - which is well suited to refining into petrol and of which Nigeria is one of the main suppliers to the US - for November delivery fell 32 cents to $49.80 a barrel in early trading on the New York Mercantile Exchange, down from Friday’s record close of $50.12.
In London the price of reference Brent North Sea crude oil for delivery in November slipped 39 cents to $46.23 in late afternoon deals. “The main news is the Nigerian one,” said Lee Elliott, a trader with GNI-Man Financial. “There is a small resolution. A deal has been struck between the rebels and government representatives in Nigeria.”
