ARAB-OPEC - Feb. 25 - Official Says No Increase In Oil Production.

A Saudi official says oil-producing nations won't increase oil production before July because they fear a sharp fall in revenue. The remarks are likely to confirm market suspicions that producers' talk of "stable prices" won't mean fast relief for consumers. In New York, crude oil for April delivery rises 38 cents to US$30.35 on the New York Mercantile Exchange. Brent crude closes at US$27.48, up 11 cents. The Saudi official says there was an implicit agreement between oil-producing countries and those outside the Organisation of Petroleum Exporting Countries to increase production "gradually as of the 3rd or 4th quarters of the year". (Countries that import oil had hoped that OPEC ministers, scheduled to meet at the end of March, would increase production to bring down prices starting in the April-June quarter. No final decision is expected before the OPEC meeting. In the past 2 weeks, some oil producers, such as Mexico, have called for OPEC to increase production beyond the current 22.976mb/d set by an agreement in March 1999. The market has closely watched the flurry of meetings held over the past 3 days, and will be monitoring a Mar. 2 meeting in London involving the oil ministers of Mexico, Saudi Arabia and Venezuela - the 3 nations that put together the Mar. 1999 agreement. The deal slashed producers' output by more than 4mb/d and sent prices soaring. Prices have nearly tripled since then, surging to the highest levels since the eve of the 1991 Gulf War.)

The Saudi oil official says that producing nations feared that increasing output in the 2nd quarter would result in a sharp fall in prices, adversely affecting their revenues. He says oil producers wanted to make sure that oil stocks in major industrialised nations were low before an increase is implemented, otherwise, prices would fall. Later Feb. 25, Saudi Oil Minister Ali Naimi says there was a possibility demand would fall in the 2nd quarter. (Officials have offered a variety of opinions in recent days primarily off the record - on oil production.) Naimi says he could not offer specifics. Naimi tells reporters after receiving US Energy Secretary Bill Richardson, who arrived from Kuwait: "We cannot specify a stance now by producing countries on whether to continue with the production cuts agreement or to increase production". (The US, the world's largest oil market, has been at the forefront of calls to producing countries to raise their rates of production to increase the world's supply of oil and bring down prices.) Following a meeting of GCC oil ministers in the Saudi capital of Riyadh on Feb. 23, officials said the ministers favoured a daily increase in production of between 2m and 2.5mb - about 8% to 10%.