Saudi Arabia Wants OPEC Oil Production Ceiling Continued

Saudi Arabia, the world’s biggest oil producer, wants OPEC’s oil output to remain unchanged through 1995 in the hope that rising oil demand will boost sagging prices, the nation’s oil minister said Friday.

“We want better prices,” and keeping output steady for another year should boost prices, Hisham M. Nazer, Saudi oil minister, told reporters after arriving in Bali for the fall meeting of the Organization of Petroleum Exporting Countries.

With demand expected to rise starting in the fourth quarter, the 12-nation group would be better off with a longer freeze on its production ceiling, Nazer said.

Oil produced by OPEC members is selling for an average below $17 a barrel, well under the group’s target price of about $21.

“I think we shall try to persuade our colleagues to roll over for 12 months,” Nazer said. Saudi Arabia produces 8 million barrels of oil a day and is OPEC’s most influential member.

OPEC accounts for more than 38% of the world’s oil and controls three-quarters of its known reserves. The group is meeting to determine how much oil it should pump in early 1995.

Analysts and oil ministers from other OPEC countries had indicated the group would keep output steady for at least six months.

“It will be six months for sure, but one year also would be good,” said Subroto of the production freeze. Subroto was Indonesia’s former oil minister and OPEC’s secretary general for six years until he retired in July.

OPEC has kept the same ceiling for itself at 24.52 million barrels a day since the fourth quarter of 1993, though actual production exceeded that by as much as 760,000 barrels a day.

Last month, OPEC production reached its highest level in 20 months, with output topping 25.28 million barrels a day, Bloomberg Energy Service estimated.