OPEC struggles for consensus on oil output Venezuela, Saudi Arabia resist cutting production

March 14, 1998|By BLOOMBERG NEWS

VIENNA, Austria -- The Organization of Petroleum Exporting Countries postponed next week's committee meeting yesterday in a bid to persuade Saudi Arabia and Venezuela to consider cutbacks in oil production to boost prices.

Prices have fallen 25 percent to four-year lows since Saudi Arabia, the world's largest exporter, persuaded the group to boost output in late November. In recent years, OPEC's 11 members have been unable to control their production, which accounts for more than a third of world supply.

Some members, such as Libya and Indonesia, called for a special meeting next week to consider cutbacks. So far, Saudi Arabia and Venezuela have resisted. Venezuelan President Rafael Caldera said yesterday that his country won't cut back output. Crude oil fell 14 cents to $14.06 a barrel in New York.

"The chance of OPEC coming together in the near future to cut production is somewhere between slim and none," said Michael Rothman, an energy market analyst at Merrill Lynch & Co. in New York.

OPEC Secretary General Rilwanu Lukman, in a statement through the group's official news agency, said a scheduled meeting in Vienna Monday of a three-member committee was postponed until March 30.

Lukman said "intensive consultations" with other ministers are continuing as some OPEC members seek to expand the committee meeting into an early gathering of all 11 members.

The delay gives ministers outside the three-nation committee more time to discuss the prospect of cutting back oil output, especially by Venezuela and others who ignore OPEC quotas to pump all they can. Analysts said that's not likely.

"It doesn't matter that they've postponed the meeting," Rothman said. "There is no evidence of quota-busters taking steps to reduce this excess supply."

Some analysts said they see signs Venezuela is softening its insistence that it won't cut output, pointing to remarks by oil minister Erwin Arrieta saying he'd attend an emergency meeting if one were called. To be sure, attending a meeting doesn't mean he'd agree to cut output.

"There's been a change in tone by the Venezuelans, and that means behind-the-scenes negotiations have proved effective," said Manouchehr Takin, senior petroleum analyst at London's Center for Global Energy Studies. "The fact that it has been canceled is a positive one."

Oil prices are reeling in part because of OPEC's decision in November to boost its official oil output quota by 10 percent to 27.5 million barrels a day as of January.

Pub Date: 3/14/98

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