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OPEC Pushes For Higher Oil Prices

Ministers from Opec, the oil producers' organisation, are likely to agree on production cuts which could push oil prices higher than the record levels.

In the US, the high cost of petrol is becoming an election issue.

The democratic challenger, John Kerry, says President George W Bush is doing nothing to reduce petrol prices.

The Bush administration however has accused Mr Kerry of wanting to raise tax on petrol, and says it has been having talks with Opec members.

Petrol prices in the US have risen to their highest level since the 1980s.

Some analysts say a production cut is likely to push prices for crude oil to well above $40 a barrel.
Last Updated: Wednesday, 31 March, 2004, 09:44 GMT 10:44 UK

Opec pushes for higher oil prices

Most members support the cut

Oil prices are set to be pushed higher at a meeting of oil-producing countries in Vienna on Wednesday.
Ministers from Opec, the oil producers' organisation, are likely to agree on production cuts which could push oil prices higher than the record levels.

In the US, the high cost of petrol is becoming an election issue.

But many Opec countries, including the biggest producer Saudi Arabia, believe production cuts are necessary to maintain prices over the coming months.

Kuwait backs delay

The democratic challenger, John Kerry, says President George W Bush is doing nothing to reduce petrol prices.

The Bush administration however has accused Mr Kerry of wanting to raise tax on petrol, and says it has been having talks with Opec members.

Petrol prices in the US have risen to their highest level since the 1980s.

Kuwait is still in favour of delaying April's output cut, Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah reportedly told a breakfast meeting in Vienna on Wednesday.

The United Arab Emirates also supports a delay in order to allow prices to cool.

The April cuts were agreed in Algiers in February.

Changing policy

But Libyan Oil Minister Fethi bin Chetwane, speaking before the meeting, said Opec members were "mostly" in favour of pushing ahead with lower output quotas.

Iran has said that it is too late to reverse the Algiers agreement to decrease output by one million barrels a day or 4%.

The difference in opinion emerging among Opec members indicates that Washington is now concentrating its diplomatic efforts on Kuwait and the UAE, instead of Saudi Arabia, in an attempt to get lower oil prices.

One factor in any decision is that oil prices are denominated in dollars, and the falling value of the dollar on international currency markets has reduced the real value of the oil revenue of Opec members.

In London, Opec rose its oil price to $31.70 a barrel on Tuesday from Monday's $31.13, Opec's news agency says.

Some analysts say a production cut is likely to push prices for crude oil to well above $40 a barrel.

That could push the global economy into a slump, while Opec, in turn, could suffer as well with a downturn sharply driving down demand for oil.

So far, most European countries have not yet felt the impact of high oil prices, because they have been compensated by the decline of the dollar against the euro and other currencies.

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