OPEC Gets Gloomy Market Report

Oil ministers from five OPEC nations met for three hours Sunday at the Indonesian Embassy in an emergency session to deal with ways to limit production and shore up international crude prices.

Sources said the ministers, who comprise the 13-nation cartel’s price monitoring committee, heard a pessimistic account of the world oil market from Subroto, the organization’s Indonesian secretary general.

The group did not issue a statement following the gathering, which included a one-hour formal meeting, according to one OPEC source.

“We heard a long report on the state of the market, which is not very good,” said a senior OPEC delegate, who asked not to be further identified.

No Dramatic Results

Ministers from the five members of the Price Evolution Committee--Nigeria, Algeria, Indonesia, Saudia Arabia and Venezuela--were to meet informally for a closed-door dinner at the Saudi Arabian Embassy later Sunday and hold another round of formal discussions Monday morning.

The talks, which analysts have predicted would not produce any dramatic results, are taking place amid a crude oil market slump that stems largely from a production spurt by nations in the Organization of Petroleum Exporting Countries.

The committee cannot take any binding decisions on its own, but can recommend that a full meeting of the organization be called before its scheduled fall session scheduled Nov. 21 in Vienna to consider ways to stem production and shore up international crude prices.

The Paris-based International Energy Agency says OPEC was producing 19 million barrels a day in August, considerably over the 15.06 million-barrel ceiling the group had agreed to for the period from June through the end of the year. That quota did not include production by OPEC member Iran.

Oil prices have hit their lowest levels since the summer of 1986, when they fell below $10 a barrel.

North Sea Brent crude was quoted at $13.30 a barrel Friday, up slightly from the beginning of the week in the wake of news of the two-day meeting. On the New York Mercantile Exchange, the November contract for the benchmark grade of U.S. crude fell 47 cents to $14.18 a barrel Friday.

According to analysts, at issue in the talks is the failure of nearly all OPEC members to respect production quotas established in an attempt to maintain the price of oil at $18 a barrel.

OPEC Chairman and Nigerian Oil Minister Rilwanu Lukman, who is attending the Madrid meeting, said last week in Indonesia that the group would examine overproduction and cooperation between OPEC and non-OPEC producers.

Increased Production

Algeria has complained to Saudi Arabia and other Gulf producers that failure to respect the quotas is causing serious hardships for other OPEC members whose economies are dependent on oil revenue.

Since the last price committee meeting Aug. 3 in Lausanne, Switzerland, a cease-fire in the eight-year Gulf War between Iran and Iraq has begun to hold. Both nations reportedly have stepped up production to earn more money for carrying out massive reconstruction projects.

During Sunday’s meeting, Subroto welcomed Venezuela’s new oil minister Julio Cesar Gil to his first formal OPEC event.

In addition to Lukman and Gil, oil ministers attending the meeting are Algeria’s Belkacem Nabi, Indonesia’s Ginandjar Kartasasmita and Saudi Arabia’s Hishan Nazer.

OPEC members are: Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.