Saturday, July 08, 2000

Saudi shipment promise brings oil prices down




By Faiza Saleh Ambah
The Associated Press

        DUBAI, United Arab Emirates — An extra 500,000 barrels of oil promised by Saudi Arabia this week is coming to the market soon, a Gulf oil official said Friday. The prospect of more oil has sent crude oil prices lower.

        Saudi Arabia will provide the majority of the new oil, but other producers of the Organization of Petroleum Exporting Countries will participate in the production increase, the official said on condition he not be further identified.

        He said Saudi Arabia is in intensive consultations with the OPEC producers participating in the increase to decide how much extra oil they will add and exactly when to do so. Non-OPEC Mexico also will add oil to the market, he said.

        OPEC countries unwilling or incapable of taking part in the production increase will lose their share to others, the official said. He would not say which other OPEC producers would participate in the production increase and would only say that the oil would be on the market “very soon.”

        The comments are an indication that Saudi Arabia is serious about its pledge Monday that it soon will increase output by 500,000 barrels a day to cool prices that had been around $30 — and that the oil giant is willing to act with or without an OPEC consensus.

        There had been skepticism that the Saudis would carry through with their pledge after no new oil was seen on the market and many OPEC members criticized the Saudi comments.

        The 10 other OPEC members reacted with anger and disbelief after Saudi Arabia said Monday that it would add about 2 percent to the cartel's official output of 25.4 million barrels a day, saying they had not been informed and that an OPEC consensus was needed.

        Except for Kuwait and the United Arab Emirates, no other OPEC members have enough surplus capacity to quickly raise their production levels.

        Saudi Arabia, the world's top producer and exporter, has excess production capacity of 2.3 million barrels per day in addition to its current quota of 8.25 million, Saudi oil officials have said.

       



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