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ARAB-OPEC AFFAIRS - July 7 - OPEC Won't Backtrack On Output Hike.

Middle East Economic Survey (MEES) reports an affirmation by Saudi Arabian Oil Minister Ali Naimi that OPEC will not backtrack on its decision to boost production as a way of stabilising the global oil market. He says: "The decision to raise the OPEC-10 output ceiling by 2 million barrels a day to 25.5 million b/d in July and then by a further 500,000 b/d in August to 26 million b/d was not up for review in Vienna". OPEC is scheduled to hold an emergency meeting in Vienna July 21. Naimi added that OPEC ministers instead would be "looking to assess the supply/demand balance and general oil market conditions". Naimi said August's 500,000 b/d increase had already been made available in terms of physical barrels. Some market watchers have been suggesting that OPEC may revoke its earlier decision to implement the increase in August amid a retreat in global oil prices. MEES said Naimi's comments were meant to clarify his June 30 statement that: "current oil prices were fair". Oil markets took that to mean that Saudi Arabia was happy with WTI oil prices well above $30/bbl, and this prompted oil prices to rise again. Naimi repeated his long-standing position that it was for the oil market to determine the appropriate level for prices, reflecting multiple factors including fundamentals and perception issues. He said Saudi Arabia doesn't support any change in OPEC's preferred price band of $22-$28 a barrel for the OPEC basket, despite some calls from other member countries for the price band to be moved higher. Ali Naimi said Saudi Arabia remains committed to the $22-28/bbl price band and believes that a price of $25/bbl is a reasonable one for both consumers and producers.
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Publication:APS Diplomat Recorder
Geographic Code:0OPEC
Date:Jul 10, 2004
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