OPEC doing all it can to reduce price, says Silva

27 January 2003
There is little more OPEC can do to control world oil prices, secretary-general of the organisation Alvaro Silva warned the World Economic Forum, convening at Davos in Switzerland, on 24 January. 'What can we do more?' he asked. 'I do not agree there is a lack of oil. The problem of the price is the threat of war.' Prices have been well above OPEC preferred price band of $22-28 a barrel since December, as a strike has reduced Venezuelan production to a fraction of previous output and fears persist that the US will launch a military attack on Iraq. Silva said that OPEC producers were doing all they could to bring the price back down to $28, but that most members are already pumping close to full capacity with only Saudi Arabia and the UAE able to increase production. He was echoed by OPEC president and Qatari Energy & Industry Minister Abdulla al-Attiyah, who told the gathering that speculation rather than reality was responsible for the high prices. 'There is no need for prices to be where they are today,' agreed Saudi Oil Minister Ali al-Naimi.

On 23 January, Saudi ambassador to the US, Prince Bandar bin Sultan, told a US conference of mayors that Riyadh would be willing to raise production further to bring prices down. OPEC officials said that his statements did not reflect the organisation's policy. On 14 January, OPEC agreed to raise production quotas by a total of 1.5 million b/d, entailing a de facto production cut of 1.7 million b/d. Saudi Arabia's quota rose to 7.963 million b/d but is expected to pump 8.5 million-9 million b/d over the coming weeks. Riyadh fears that high prices will slow global growth and reduce demand for oil. 'When our American friends catch cold, we catch pneumonia in our part of the world,' said Prince Bandar.

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