OPEC members make case for quota changes

02 August 2002

The oil price remained largely unchanged in late July, held up by fears over Iraq but pressured by a rise in US crude stocks. However, there is increasing evidence that OPEC members are becoming anxious to raise their output.

Venezuela in late July said its 2002 oil revenues would likely be about half the 2001 figure. Caracas claims that OPEC owes it for a disproportionately large cut to counter the oil price crash of 1998. However, the country is believed to now have minimal excess production capacity because of a lack of investment in state-owned producer Petroleos de Venezuela in recent years. Algeria and Nigeria are also thought to be advocating an increase to their ceilings, either within a general OPEC rise, or by altering their individual quotas.

But there are mixed signs over how far demand is growing, with US gasoline stocks falling in late July, but crude reserves increasing. Figures released by the American Petroleum Institute on 30 July for the week ending 26 July showed gasoline stocks down by 1.4 million barrels and crude stocks up by 873,000 barrels.

Continued speculation over the fate of Iraq kept the price high despite the stocks uncertainty, with reports that Baghdad has dropped its illegal surcharge on oil sales to Turkey indicating that the retroactive pricing regime imposed by the UN is starting to hurt. Brent oil was selling at $26.34 a barrel on 31 July, a small increase on the previous week.

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