MercoPress. South Atlantic News Agency

G7 calls for more oil; Opec decides in June

Finance ministers from the seven highly industrialized countries, G 7, called for lower oil prices at the end of their meeting this weekend in New York.

"We call on all producers to take action to ensure world oil prices return to levels that are consistent with lasting economic prosperity and stability, especially for the poorest nations", said the G 7 final statement.

G7 wants oil exporters, mainly OPEC countries, to lift production quotas and help cool prices that have reached two decades record level prices of over 40 US dollars the barrel. However OPEC countries meeting in Amsterdam last Saturday decided to delay any change in production levels at least until next month.

G 7 statement was a strong backing for Saudi Arabia's proposal to OPEC members to increase production by two million barrels per day, but several countries, among which Venezuela and Libya, opposed the initiative arguing that other factors "such as the situation in Iraq" are pushing prices up.

The eleven member cartel supplies about a third of the world's oil production, 23,5 million barrels per day, but is already pumping an extra two million barrels.

"It would be wrong if the oil producers prevented the world economy, which has been through such a difficult time, from strengthening in the year to come", said Britain's Chancellor of the Exchequer quoted by BBC.

Global oil demand is growing rapidly because of a healthier US economy and expansion in China. The US is also trying to replenish stock piles ahead of the summer season and Asian nations are trying to protect themselves from future price shocks by creating their own strategic reserves.

In Amsterdam OPEC president Purnomo Yusgiantoro expressed deep concern about high prices but added that "the consultations observed that bringing order and stability to the market is the responsibility of all stakeholders in the industry and called for joint efforts to bring prices down from current high levels".

OPEC said it was putting off a decision on raising output quotas until a full meeting scheduled for June 3 in Beirut. The petroleum exporting countries are very sensitive about reaching consensus decisions before changing its output policy.

Saudi Arabia's oil minister Ali al-Naimi stated that his country would be increasing production to 9 million barrels per day from June could even reach 10,5 million, if necessary.

The positive assessment of the world economy, in spite of the "risk" posed by oil prices, was confirmed by G7 saying that recovery was "proceeding rapidly" and strong, with its best growth rate in fifteen years, estimated in 4,25% for 2003/04.

The G7 ministerial meeting will be followed by a two day summit starting next June 8 in Sea Island, Georgia, US.