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REUTERS
Nicosia, Aug 23: OPEC's president has proposed the formation of a committee to shape policies that would enable the producers group to maintain recent oil price gains and ensure market stability, the Middle East Economic Survey (MEES) said on Monday.
MEES said it understands that Youssef Yousfi has circulated a letter to OPEC member governments proposing the formation of a committee of experts that would be mandated to propose policy options ``to keep the oil price gains registered so far and to maintain price stability in the future.''
``Youssef suggests that the proposed committee of experts should meet in early September and submit its recommendations to the forthcoming OPEC ministerial conference in Vienna on September 22,'' MEES said.
The weekly industry newsletter said the committee would also be charged with determining mechanisms ``to accommodate potential increases in production capacity in the OPEC member states.''
``One idea that is receiving serious consideration in OPEC circles would befor member countries, backed by some non-OPEC participants, to agree upon a mechanism whereby the producers concerned intervene effectively to adjust physical supply by an appropriate volume -- upwards or downwards as the case may be -- whenever prices move outside the targeted band (say $18-$20 a barrel for Brent crude) for any specific period of time,'' MEES said.
``The idea has already been the subject of intra-OPEC consultations and has gained support from a number of leading OPEC players, including Saudi Arabia and Venezuela,'' it added.
OPEC and producers outside the cartel in March agreed to a major oil output cut pact that has secured significant market recovery. Oil prices have hit their highest levels in nearly two years.
Increasing attention is now focused on how OPEC can maintain the price gain and guarantee long-term market stability.
OPEC powerhouse Iran said on Sunday that it was too early for oil producers to abandon global output cuts.
Iran's OPEC governor Hossein KazempourArdebili, a candidate for the group's key secretary-general post, told Reuters that oil prices on an average this year were still not satisfactory.
He said that a sustained market recovery - not a brief rally - was crucial to boost the ravaged economies of oil-producing nations hit hard by months of depressed prices.
OPEC kingpin Saudi Arabia -- the world's biggest oil producer -- wants sound proof that oil market fundamentals have fully returned to health before considering OPEC action on easing supply curbs.
``Given that there is pretty much unanimous consensus among all OPEC members (plus Mexico and Norway) to the effect that the output cutbacks agreed upon last March should continue to be implemented...it is considered highly improbable that the OPEC ministers will agree to any increase in oil supply at their Vienna meeting...,'' MEES said.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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