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Financial Times: Opec softens tone on oil supply

By Carola Hoyos, Chief energy correspondent
Published: April 16 2007 08:38 | Last updated: April 16 2007 08:38

Opec, the oil cartel, on Monday softened its policy to withold oil from the market, saying it would supply more if necessary.

Mohammed al-Hamli, president of the Organisation of the Petroleum Exporting Countries, which supplies about 40 per cent of the world’s oil, reiterated: ”Oil supply is adequate. The market is well-supplied.”

But he added: ”We are ready to supply more if the market needs more.”

The group agreed to maintain the 1.7m barrel a day cuts it decided late last year. But since then international oil prices have rallied, with Brent, the UK benchmark, gaining $10 to trade at around $70 a barrel, well above Opec’s stated aim of $60 a barrel prices.

US oil prices have also risen, but have remained lower than those in Europe. Nevertheless, inventories are far from flush and analysts are warning that demand will grow as the summer driving season aproaches.

Saudi Arabia, Opec’s most influential member, is also keen to maintain a good relationship with its biggest customers, especially the US.

Saudi’s King Abdullah at the weekend used his annual remarks to the unelected Consultative Council, or parliament, to reiterate the kingdom’s long-term intention to remain the world’s largest oil producer.

He said Saudi Arabia was ”seeking to increase its oil production capacity so that it can meet its commitments for national growth and the demands of the international economies.”

He added Riyadh was ”aware of its international responsibilities and is working to create fair prices to this resource that take into consideration the interests of the producer and the consumer.”

The United Arab Emirates, another Opec country intent on remaining an important energy supplier, at the weekend bucked the growing industry trend of barring international investment, by attracting bids from the world’s biggest international oil companies to develop a $10bn gas project.

BP, headquartered in London, and Anglo-Dutch Royal Dutch Shell on Sunday both said they had bid to develop the large, technically complicated sour gas deposits of the Shah and Bab fields, while Total of France, the US’s ConocoPhillips andd Occidental Petroleum were also in the running, according to Dow Jones.

Meanwhile, half way around the world, Hugo Chavez, president of Venezuela, also an Opec member, is hosting an energy summit he is already using as a platform to spread his anti-US message.

Hosting nearly a dozen heads of state, Mr Chavez, said on the eve of the meeting: ”Gradually the US empire will end up a paper tiger and we the peoples of Latin America will become true tigers of steel.”

Last week Mr Chavez, who is wresting control of Venezuela’s oil fields back from international oil companies, said he would use the military to make the transition. The remark was seen as a populist slogan rather than a threat to use force.

Copyright The Financial Times Limited 2007

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