Opec President Seeks Six Percent Slash In Oil Production

February 10, 1992|By N.Y. Times News Service

PARIS -- The president of the Organization of Petroleum Exporting Countries said yesterday that he would press for a significant cut in oil production to prop up sagging prices, which have dropped by 20 percent since November.

Jibril Aminu, also the oil minister of Nigeria, said he would ask OPEC's 12 members to reduce production by about 6 percent when they meet on Wednesday in Geneva.

At the moment, the average price of OPEC crude oil is about $16 a barrel, and OPEC output has increased to an 11-year high of 24.2 million barrels a day.

Americans and other consumers have been enjoying the benefits of OPEC's high production. Retail gasoline prices are at their lowest in months, and heating oil prices also are quite low.

"I think we need to cut by 1.5 million barrels per day in order to firm up prices, arrest the slide and begin moving toward the $21-a-barrel" price that OPEC has set as a goal, Mr. Aminu said in a statement issued in Lagos, Nigeria.

Venezuela's oil minister, Celestino Armas, said last week that there was "a growing inclination among OPEC producers to agree to reduce output in order to raise prices."

But agreeing on how to regulate production is never an easy matter for OPEC, whose members usually have a difficult time deciding on who will get what share. Numerous meetings in recent years have ended in stalemates, or with production ceilings that are subsequently ignored.

This week's meeting is likely to be little different.

Iran, Libya and Algeria are seeking the largest cuts in production, as much as 10 percent. But any agreement to limit output requires the consent of Saudi Arabia, OPEC's largest and most influential member.

The Saudis currently pump about 8.5 million barrels of oil a day, about 35 percent of OPEC's total.

Saudi Arabia has been adamant about retaining such a share, whatever cuts are made.

The pressure to cut output and increase oil revenues also reflects economic hardships and social tensions in Algeria and Venezuela, situations that have been heightened by declining oil revenue since November.

The Saudis have tried to strike a conciliatory note in recent weeks, saying they are willing to reduce output in conjunction with others. In late January, Saudia Arabia reduced production by 100,000 barrels a day.

But the Saudis have been deliberately vague about how far they will go in order to leave more leeway for this week's negotiations in Geneva.

For the last 18 months, OPEC has been spared the difficulties of reducing output because of the disappearance of Kuwait and Iraq as key oil producers. The other OPEC members made up for the shortage by pumping as much oil as they could produce.

By far the greatest beneficiary of this policy has been Saudi Arabia.

Its share of OPEC's overall output went from 24 percent before the Persian Gulf crisis to 35 percent now. Venezuela and the United Arab Emirates also profited handsomely.

The three countries have opposed any reversal of the policy of unfettered production until a few weeks ago, when prices started to slide.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.