20000221Oil exporters' consensus on output rise

DUBAI: Oil producers have a consensus on the need to raise output and are busy discussing how many extra barrels to unleash on a hot market and when, Gulf sources said on Sunday. "The exact amount of the increase and a timetable are under intense discussion among oil producers now," one of the Gulf sources told Reuters.

An OPEC delegate familiar with the organisation's policies told Reuters on Sunday that producers would likely ease supply limits starting on April 1.

"The first goal is the stability of the market, the second goal is not allowing an oil shortage to happen and the third goal is the stability of the world economy," said one of the Gulf sources.

OPEC and its allies Mexico and Norway are under mounting pressure to ease supply restrictions from huge markets such as the United States, the world's biggest oil consumer.

Washington is worried about high oil prices and U.S. Energy Secretary Bill Richardson will soon visit major oil-producing states such as Saudi Arabia and Kuwait to express the American viewpoint on prices, which have tripled over the last year.

Oil traders are focusing on two crucial upcoming meetings likely to set production policy after supply curbs of 4.3 million barrels per day (bpd) expire on March 31.

The oil ministers of OPEC's Saudi Arabia and Venezuela and non-OPEC ally Mexico - leaders of a global production cut pact - are due to meet in Europe on March 2. OPEC ministers will then hold their full conferenc in Vienna on March 27.

OPEC has been trying to build on the success of supply curbs imposed last year which have raised prices to their highest levels since the 1991 Gulf War.

The supply curbs have triggered major drawdowns in crude stockpiles and sent prices rocketing.

NAIMI MISUNDERSTOOD BY SOUTH KOREA

OPEC and other producers now face the challenge of easing supply curbs without triggering a new price collapse.

International Brent Blend futures lost 46 cents to finish trade at $26.21 a barrel in London on Friday. It has averaged $26 so far this year, after $18 in 1999 and just $13.30 in 1998.

Despite resistance to output hikes from some OPEC price hawks, there are growing signs that producers will decide to ease the supply limits.

Iran, Kuwait, Libya and Algeria want to keep markets as high as possible and favour extending the cuts.

But other key players say it's time to open up the oil taps.

Mexican Energy Minister Luis Tellez reiterated on Friday that the world's leading oil producers should increase exports by April 1.

The president of Venezuela's state oil company Petroleos de Venezuela (PDVSA), said on Friday OPEC would need to add 2.2 million bpd just to stabilise prices.

Saudi Arabia, OPEC's most influential member, has suggested it would back releasing some extra volume to the market.

South Korea's presidential office on Friday quoted Saudi Oil Minister Ali al-Naimi as saying in talks in Seoul that an extra three million barrels per day (bpd) of crude production was needed to keep prices reasonable and to cope with any sudden rise in demand.

But a Saudi oil official told Reuters on Sunday that Naimi told Korea's president that Riyadh has spare output capacity of three million bpd, not that the oil market needed that many extra barrels.-Reuters