Newspaper article THE JOURNAL RECORD

OPEC's Output Causes Concern of Oversupply

Newspaper article THE JOURNAL RECORD

OPEC's Output Causes Concern of Oversupply

Article excerpt

By Sally Jacobsen Associated Press BRUSSELS, Belgium _ One year after Iraq invaded Kuwait, the Organization of Petroleum Exporting Countries continues to maintain a high output of crude oil despite the two countries' absence from the market, according to estimates Friday.

The strong production by the Organization of Petroleum Exporting Countries has raised concern about too much oil on the market later in the year with resumption of export sales by Iraq and Kuwait.

Indonesian Oil Minister Ginandjar Kartasasmita urged the producing nations to consider cutbacks in anticipation of increased Kuwaiti and Iraqi exports.

In Jakarta, the Indonesian capital, he said that "all OPEC members should prepare themselves to reduce their oil production, if there is indication of oversupply," to lift prices to the group's target of $21 a barrel.

The average price of a basket of crudes monitored by the 13-nation cartel was $18.51 a barrel at the end of July, about the same as a year ago when Iraq overran Kuwait, causing turmoil in the market.

Prices topped $37 on fears of a disruption of supplies from the Gulf region. But they fell back after OPEC widened its taps to make up for lost Iraqi and Kuwaiti crude, embargoed by United Nations sanctions.

Soon after the invasion, the cartel scrapped its output quotas so nations could pump as much as possible. The quotas have not yet been put back in place.

In its Monthly Oil Market Report, the International Energy Agency estimated the cartel pumped 23.1 million barrels of oil a day in July, down about 100,000 barrels from the previous month.

The production was well over the ceiling of 22.3 million barrels a day set by OPEC for the July-September period.

The energy report said there was an unexpected surge in exports in late June by superproducer Saudi Arabia. The increase, it said, boosted cartel production to its highest level since February during the Gulf War. …

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