OPEC deal

Press, 30 November 1989, Page 34

OPEC deal

NZPA-AP Vienna Analysts predict the new Organisation of Petroleum Exporting Countries production accord will help slow a fall in oil prices in the first half of 1990 by dampening the cheating on quotas by the cartel’s 13 members. OPEC's 13 Ministers agreed yesterday to increase the cartel oil output to 22 million barrels a day, up from 20.5 M bpd in the current quarter. The pact seeks to maintain a minimum target of SUSIB (SNZ3I) a barrel. The cartel nations are now pumping up to 23.5 M bpd but the analysts said the latest accord should bring the output down to some 22.8 M bpd. The deal “looks better than most people thought was possible,” Mr Fergus MacLeod, an oil analyst with the London investment firm, Barclays de Zoete Wedd, said. The Ministers came up with a fragile solution for demands by Kuwait and the United Arab Emirates for greater shares of production. The two have been producing 2M bpd each, or about double their quotas. Kuwait agreed on Tuesday to a quota of 1.5 million bpd, up from a 1.15 M bpd and the United Arab Emirates agreed to a steady quota of 1.095 M bpd. Several Ministers acknowledged that they expected the United Arab Emirates to con-

tinue to overproduce — perhaps less than before. Late on Tuesday, the spot price of North Sea Brent blend, the most widely traded international crude oil, was SUSIB.3O a barrel, down from 5U518.45 a barrel late on Monday. Because of the accord, the analysts said they expected prices of Brent blend would drop to SUSI 7 a barrel. OPEC’s basket price of crude oil stood at 5U517.74 a barrel, the cartel’s secretarygeneral, Mr Subroto said. “We feel that if it deviates too much from the minimum reference price, then we will meet,” Mr Subroto said. OPEC’s eight-member monitoring committee is expected to meet in March “in order to assess the market,” the Ministers said in a communique. It was the first time OPEC had introduced the notion of a “minimum price, ’’OPEC watchers said. The Algerian Energy and Mining Minister, Mr Sadek Boussena, said this meant there was now ‘a guarantee’ that OPEC would defend the average OPEC price at this level. Mr Hisham Nazer, Saudi Arabia’s influential Oil Minister, predicts the agremeent would cut production by up to 1.3 M bpd. “There is more commitment to the quota and the production ceiling,” he said.