Oil ministers agree to boost oil production

By Bruce Stanley, Associated Press, 03/02/00

LONDON -- Oil ministers from Saudi Arabia, Venezuela and Mexico agreed today that oil exporting countries should boost production in an effort to ease global oil prices from their highest levels in nine years.

In trading in London after the announcement, Brent crude oil edged up six cents to $29.12 a barrel.

The ministers agreed in principle to an unspecified increase in production and said that further details would come at the March 27 meeting of the Organization of Petroleum Exporting Countries.

"Uppermost in our minds is to maintain stability in the markets," said Saudi Oil Minister Ali Naimi. "There is need for additional production. The issue is when and how much."

Oil exporters have come under intense pressure in recent weeks from the United States and other major oil consuming nations to pump more crude and bring prices down.

The ministers refused to confirm the size of the expected increase.

"I think the number will be put forward when we finish our consultation with all other members," Naimi said.

The ministers also refused to say what price they hoped to see for crude oil, and gave no idea of when they might increase output.

Mexican Oil Minister Luis Tellez said demand has increased dramatically.

"An increase in production is warranted and needed during the year," he said.

Mexico is not an OPEC member, but agreed to cooperate with the group in whatever decision it may reach at the OPEC ministers' meeting in Vienna, Austria.

The world consumes about 77 million barrels of oil a day, but production has fallen to 75 million barrels. The tight supply has forced oil companies to draw on inventories that have fallen to dangerously low levels, leading to the sharp price increases in heating oil, diesel fuel and, more recently, gasoline.

Oil prices have soared from $10.72 a barrel on Dec. 10, 1998, to a nine-year high of $31.77 on Wednesday in trading on the New York Mercantile Exchange, largely because of a shortage of supply and increasing demand.

Prices are at their highest since the outbreak of the Persian Gulf War in January 1991.

OPEC produces about 30 percent of total worldwide oil output.

Prices surged after OPEC made deep cuts in production last March. OPEC has slashed output by 4.3 million barrels per day since the first round of cuts in 1998.

http://www.boston.com/news/daily/02/opec.htm

-- Martin Thompson (mthom1927@aol.com), March 02, 2000