OPEC Warned Rising Oil Stocks May Lower Price

Venezuela, the current president of the Organization of Petroleum Exporting Countries, has warned the group that rising oil stocks could result in a drop in world oil prices, an OPEC source said Sunday.

The source said Venezuelan Oil Minister and OPEC President Ali Rodriguez wrote in a letter to the group’s Secretary-General Rilwanu Lukman: “I wish to point out that attention should be given to the rapid stock building of crude which is presently taking place and to the possible impact that such a situation could provoke in prices for the rest of this year and mainly for 2001.

“I wish to ratify my communication dated July 16, addressed to all OPEC members, in which they were requested to be prepared to take the necessary steps to raise production by 500,000 barrels by July 28, if prices remained above $28,” he wrote, according to the source.

“Since such a condition has not been fulfilled such a mechanism is therefore not applicable.”

Oil had come under sustained pressure earlier this month after news last week that Saudi Arabia, the world’s biggest oil exporter, was quietly leaking extra supplies after failing to gain support for an extra 500,000 barrels per day by OPEC under a price band mechanism agreement.

International benchmark Brent crude settled in London on Friday at $27.36 a barrel. Oil has risen modestly since Wednesday, stemming a slide that saw crude fall to 11-week lows.

Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah last week asked Lukman to consult Rodriguez about issuing a statement to OPEC members that a price band mechanism was not operative at this time and there was no need for an increase in oil output at the end of July due to a drop in oil prices.