What will OPEC decide at emergency conference in Beirut?

On June 3 at the 131st conference of OPEC members' oil and energy ministers in Beirut, the capital of Lebanon, Venezuela intends to submit a proposal to legalize production and export of crude oil over and above the quotas that the 11-country oil cartel set.

Venezuela's Energy and Mining Industry Minister Rafael Ramirez will submit this proposal on behalf of Caracas, a source in the Venezuelan delegation in Vienna said.

In Mr. Ramirez's opinion, "the aggregate output of oil by the world oil cartel's member countries currently exceeds the official quotas set at the 130th conference in Vienna by 2.5 million barrels a day. This Gordian knot can be cut by one blow - by making the decision to increase quotas for oil extraction and export by exactly this figure."

Mr. Ramirez is not going to submit a proposal to revise the crude oil pricing corridor which has been $22-$28 per barrel of OPEC oil since Venezuela's proposal in 2002. He said that this corridor still "had the right to exist."

Another OPEC member, Kuwait, supports a proposal from Saudi Arabia, an OPEC heavyweight that accounts for approximately one-third of the cartel's total oil export, to increase the oil production quota by 2 million barrels a day. "Kuwait backs Saudi Arabia's proposal and supports raising oil output until the market prices are stabilized," said Kuwait's energy minister and the chairman of the Kuwaiti Oil Corporation, Sheikh Ahmed Fahad Al-Ahmed Al-Sabah stated.

In his opinion, the increase of oil prices was caused not only by an oil shortage on the markets but also by the United States' acute need for gasoline and the unstable situation in the Middle East, especially in Iraq.

Speaking about the effect the terrorist attack in El Hubara, Saudi Arabia, had on oil prices, the minister noted that the Saudi authorities were in a position to protect their oil enterprises. "We are fully confident in the ability of Saudi Arabia'sauthorities to maintain the volume of oil output and ensure the safety of the oil sector's personnel," he stressed.

Kuwait, not waiting for a decision at the Beirut conference, increased its oil output and export by 150,000 barrels a day without preliminary permission.

"We are now producing 150,000 barrels over and above our oil quotas," the minister said. "We are doing so in order to settle the world energy markets and reduce the price of crude oil by at least a small margin."

He said that Kuwait could produce 200,000 barrels a day more than the decisions of the 130th OPEC conference in Vienna allowed it.

The price of oil on the international exchanges has grown significantly recently. In New York, the price reached a record high of $42 per barrel, a record that was set more than 20 years ago.

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Author`s name: Editorial Team