Saudis back OPEC increase
By Peg Mackey and Ghaida Ghantous
1 hour, 19 minutes ago
VIENNA (Reuters) - Leading OPEC producer Saudi Arabia backs an increase in cartel output limits even though it is struggling to find buyers for more of its crude, Saudi Oil Minister Ali al-Naimi said on Saturday.
"Absolutely, yes," Naimi said of Riyadh's support for raising OPEC's 28-million barrels a day formal output ceiling.
"Absolutely not," was his assessment of whether or not he saw extra demand for OPEC crude on the world market. "I've offered up to 11 million (barrels a day) but we have had no response whatsoever."
The Organization of the Petroleum Exporting Countries starts a 2-day meeting on Monday expected to lift supply and quell demands from importing nations aghast at prices that hit a record $70 a barrel earlier this month.
OPEC's analysis, backed by industry experts, is that world crude supplies are ample. Refinery bottlenecks in consuming nations are the problem.
"You know better than I where the constraints are, they are not on the supply side on crude oil, the constraints are in the downstream and Katrina damaged some of the infrastructure," said Naimi.
Hurricane Katrina's assault on U.S. Gulf refineries has caused a refining crisis with 880,000 barrels a day, about a tenth of U.S. plant, out of action in the world's biggest consumer.
The slowing of global fuel demand growth resulting from highs prices mean it is in OPEC's interest to push prices down further from Friday's $63 close for U.S. crude.
Riyadh has already scouted refiners to sell more of its crude in October, but with only high-density, high-sulfur crude, difficult to process into transport fuel, it has found no takers.
The only option left for its least popular grades would be to discount prices more heavily.
"We price to be competitive in the market, we don't price to increase demand," said Naimi.
Now pumping at 9.5 million bpd, Naimi said Riyadh was prepared to go to full capacity of 11 million bpd, implying support for an OPEC increase of as much as 1.5 million.
"I already offered 11 million from Saudi Arabia which means I am willing to support whatever number up to that level," he said.
Given OPEC's struggle to sell more, most bets are on a token 500,000 bpd, taking OPEC to 28.5 million, plus the 2 million pumped by Iraq which is exempt from cartel quotas.
"We're going to need to make a gesture after Katrina, probably with 500,000 barrels a day," said an OPEC delegate.
i heard on the news the u.s. companies are rejecting the new oil cuz it's the "wrong kind", "our refineries can't process it", "our refineries can only process so much", blah blah blah. they don't want it cuz then they'll have lots of gas and the prices will go down.
so here we have wahabi backing saudi arabia trying to help us out while good ole patriotic made in america gas companies are trying to fuck us. what a world we live in!