G7 to pressurise Opec

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Saturday, 16 September, 2000, 14:20 GMT 15:20 UK G7 to pressurise Opec

Germany and Spain agree fuel taxes will not be reduced

German Chancellor Gerard Schroeder said the group of seven industrial nations (G7) will ask oil-producing countries to adjust output in order to bring down fuel prices. Mr Schroeder and Spanish Prime Minister Jose Maria Aznar have agreed at a Spanish-German summit in Spain that cuts in duty are not the right response to the rise in fuel prices and that oil price policy must not be set by demonstrations.

But Kuwait's oil minister says European duties and not production levels are responsible for spiralling prices.

Spanish farmers, who have called for a reduction in fuel tax, had planned a series of protests to coincide with the meeting.

Mr Schroeder told Mr Aznar that the G7 will tackle the issue of steeply rising oil prices.

Barcelona was brought to a standstill on Friday "We will try together, perhaps via Ecofin but also via G7, to develop ideas which will lead to a process in which oil production will be adjusted to the needs of the global economy," he told reporters.

In Germany, lorry drivers converged on Mr Schroeder's home city of Hanover for the second day running but a BBC correspondent in Berlin says the protests in Germany have achieved little more than causing minor inconvenience.

Opec defiant

Kuwait's Oil Minister Sheikh Saud Nasser Al-Sabah said on Friday that the volume of crude oil production was not to blame for high fuel prices in Europe.

Kuwait's Oil Minister Sheikh Saud Nasser Al-Sabah says fuel duty is to blame "Taxes in Europe are too high.

"Consumers are convinced now that Opec is not responsible for the price hike, but taxes are.

"I hope they review tax rates in the interest of consumers," he said.

Price peak

On Friday crude oil rose to US$36 a barrel in New York trading before closing at $35.92.

It was the highest level for the 10 years since the Iraqi invasion of Kuwait in 1990.

Oil analysts say the steep rise was due to friction between Iraq and Kuwait.

On Thursday, Iraq's Oil Minister Amer Rashid accused Kuwait of stealing oil from two fields close to the border between the two countries.

The accusations were similar to those made before Iraq's invasion in 1990.

Another inflationary factor was the report of a tropical depression heading toward the Gulf of Mexico.

It could develop into a tropical storm and halt offshore oil production.

http://news.bbc.co.uk/hi/english/business/newsid_927000/927568.stm

-- Martin Thompson (mthom1927@aol.com), September 16, 2000


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