OPEC stops short of pledge to boost production of oil Cartel says production is sufficient, suggests rich nations lift taxes

Associated Press Originally published Sep 30 2000 CARACAS, Venezuela - OPEC is pledging to create a kinder, gentler oil cartel that would fight to protect the environment and the rights of developing nations, but it made no specific promise to boost production to temper soaring crude prices.

Venezuelan President Hugo Chavez said yesterday that the Organization of the Petroleum Exporting Countries could increase production if necessary, although the oil cartel claims that production is sufficient.

"We act in cooperation, and [more oil is] a possibility we have accepted within OPEC," Chavez said after meeting with Iranian President Seyyed Mohammad Khatami.

Chavez, who holds no official position with OPEC, insisted that neither OPEC giant Saudi Arabia nor Iraq - which is angry at OPEC's failure to denounce U.N. sanctions in a summit declaration Thursday - will act alone.

Wrapping up their first summit in 25 years, delegates said Thursday that rich nations should alleviate high petroleum prices by lowering their oil taxes.

While that suggestion might or might not be heeded, the United States' decision to draw 30 million barrels of oil from the government reserve, as well as Saudi Arabia's repeated pledge to do what is necessary to stabilize prices, helped push down crude oil prices from $36 to around $30 a barrel.

OPEC members said their goal was to get oil prices between $22 and $28 a barrel. Next month, the oil cartel says, it will begin releasing extra oil into the market to help achieve that goal.

Prices of light sweet crude oil traded at $30.84 a barrel yesterday on the New York Mercantile Exchange, up 50 cents from Thursday but well below the 10-year highs of nearly $36 a barrel reached this month.

However, a cold winter could send prices higher, and the market is waiting to see if OPEC fulfills its promise to increase output by 800,000 barrels a day beginning next month.

Jareer Elass, managing director of Oil Navigator, a Washington D.C.-based consulting firm, said oil supplies seem sufficient. "I don't think the market physically needs more oil. I think it's all psychological," he said.

In Brussels, Belgium, European Union finance ministers could not agree yesterday on whether to follow the United States and dip into strategic oil reserves to help lower prices.

Luxembourg's Economics Minister Henri Grethen opposed the move, saying it would have no impact. "These reserves are for strategic reasons such as a crisis in a producing country," he said.

"We took no decision today, but we did not rule anything out for the future," said French Finance Minister Laurent Fabius, who led the meeting. The French and Spanish presidents have suggested dipping into the reserves.

Chavez had said at the summit's closing ceremony that OPEC will supply its oil to thirsty world markets but at "fair" prices that bring a profit.

He also urged members of OPEC - on the verge of collapse two years ago amid rock-bottom prices of $10 a barrel - to maintain their united stance against international demands for lower oil prices, despite longtime differences that have often threatened to tear the organization apart.

Conflicts among OPEC members Iran and Iraq, Iraq and Kuwait, Libya's pariah status and Saudi Arabia's support of U.N. sanctions against Iraq were set aside in the so-called "Caracas Declaration," which pledged to help eradicate poverty, improve the environment and look for alternative sources of energy.

Chavez said he had plans to talk with European leaders in November about oil and debt relief for developing nations.

http://www.sunspot.net/content/archive/story?section=archive&pagename=story&storyid=1150490203902

-- Martin Thompson (mthom1927@aol.com), September 30, 2000