By Robert Corzine in Vienna Published: September 10 2000 19:47GMT | Last Updated: September 11 2000 06:31GMT The world's leading oil exporters agreed on Sunday to boost output in an attempt to stave off further price rises that petroleum consuming countries fear could threaten the world's economic stability. Oil ministers from the Organisation of Petroleum Exporting Countries agreed to raise output by 800,000 barrels a day. It will be the third Opec production increase this year, and is seen as the last chance for the cartel to take some speculative steam out of world oil markets before the northern hemisphere's peak winter demand. In recent weeks oil prices have surged to fresh 10-year highs of around $35 a barrel as reports of continuing low inventories of crude oil and refined products in the US, the world's biggest single oil market, raised the spectre of winter supply shortages. Oil ministers meeting in Vienna said on Sunday they wanted to see prices within the $22-$28 a barrel price band set by the group earlier this year. However, analysts say it is unlikely that the latest production increase will do much to force prices below $30 a barrel, at least in the short term. Given Opec's current over-production, some analysts believe the number of "new" barrels reaching the world oil market as a result of Sunday's agreement could be as few as 325,000 barrels per day. In addition it will take at least seven weeks for much of the new oil to be shipped from the Gulf to the US. Although the latest increase may not prove decisive in capping the oil market buoyancy, much will depend on how those markets view the determination of Saudi Arabia - Opec's dominant member and the member state most wary of high oil prices - eventually to push prices below the politically sensitive $30 level. Over the past week Saudi officials have adopted an unusually high public profile in an effort to talk down prices. The US, the world's biggest oil importer, called the agreement "a step in the right direction". But a White House official added: "Whether this will be effective and will be enough to stabilise the market remains to be seen." Ali Al-Naimi, the Saudi Arabian oil minister, and the leading figure in the Opec deliberations, said he was "happy" with the agreement, even though the kingdom had been reported to be advocating an increase of around 1m barrels a day or more. He said the agreement had been built around a consensus within the cartel. Later, Saudi Arabian officials confirmed that Opec is "prepared to do more if necessary" to ensure that there is adequate oil on the world market to dampen price pressures. The next opportunity to increase production could come in late October. Much of the discussions in Vienna centred around the amount of spare capacity that Opec has. Although most countries are said to be close to capacity, Saudi Arabia is thought to have between 1.6m and 1.7m barrels a day in surplus capacity even after the quota increase. The finance ministry of France, which holds the rotating presidency of the European Union, also said the increase was a step in the right direction, although a final verdict would depend on its impact on the oil prices. _______________________________________________ Crashlist resources: http://website.lineone.net/~resource_base To change your options or unsubscribe go to: http://lists.wwpublish.com/mailman/listinfo/crashlist
