OPEC to meet early in Beirut on quotas

Oil prices edge up in N.Y., remain below $40 a barrel


Scrambling to control high oil prices, the Organization of the Petroleum Exporting Countries will meet this weekend in Beirut, Lebanon, before its official conference there Thursday, and might pursue a plan to raise quotas sharply or do away with them entirely, an OPEC spokesman said yesterday.

Lifting quotas entirely "could be one of the options" that OPEC considers this weekend, Abdulrahman al-Kheraigi, a spokesman for the 11-nation cartel, said in a telephone interview.

"That option might be seriously considered," he said, "but I haven't heard anything official. I'm not ruling out anything, for now, though. Everything will be on the table."

He said that raising quotas by 2.5 million barrels a day would be the most realistic option. "Suspending the quota ceiling is highly unlikely; there has to be a ceiling."

Signs that OPEC may be nearing a decision to add more oil to a tight global market helped push oil prices below $40 a barrel for the first time in weeks. After a sharp slide this week, crude oil prices edged up yesterday. In New York trading, the July futures contract settled at $39.88 a barrel, up 44 cents, or 1.1 percent.

The Wall Street Journal reported yesterday that a suspension of production quotas was among the options that would be considered by OPEC. Still, few industry analysts said they expected the OPEC meeting to touch off a steep fall in prices.

The coming OPEC meeting is more of a political than technical issue for the oil markets, Frederic Lasserre, head of commodity research at Societe Generale in Paris, said in a telephone interview.

Any increase in quotas, he said, would not bring more barrels to the market. A quota that is greater by 2.5 million barrels a day would cover the overproduction that OPEC members are already indulging in.

Looking toward next week, Lasserre said: "The market seems to think we have seen the highs now, but that doesn't mean we are going to enter into a huge downward trend."

Still, he added, "We'd have to have some fresh news to justify prices going higher."

In Moscow yesterday, Spencer Abraham, the U.S. energy secretary, praised Russia's plans to increase oil exports to America.

Russia, the world's second-largest oil exporter after Saudi Arabia, produced 9.01 million barrels of oil a day last month, a post-Soviet record. But the country's pipeline export capacity recently hit a ceiling of 4 million barrels a day.

Abraham said record oil prices are being eased by promises of greater supplies from Saudi Arabia, Kuwait, the United Arab Emirates and Nigeria.

The United States wants Russian oil to reach the market quickly - possibly through a pipeline that could be built in the northern part of Russia for shipment across the Atlantic. Still, any new pipelines in Russia are years away.

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.