Oil price tops $20 as Opec abides by production cuts
Saturday 31 July 1999
Brent crude surged to $20.11 - more than double its price less than six months ago - before retreating back below $20 later in the day. The rise in oil prices prompted a rally in oil shares. Royal Dutch Shell rose by more than 4 per cent to 497p while BP Amoco shares strengthened 15p to 1191p.
Sentiment was buoyed by comments from Opec oil ministers meeting in Vienna. The Iranian Oil Minister, Bijan Zanganeh, said that Opec should keep to the production cutback of two million barrels a day for at least the next eight months to support the oil price.
The Kuwaiti Oil Minister, Sheikh Saud Nasser al-Sabah, meanwhile said that the Opec producers were "fully complying" with the agreement in March. According to independent estimates, Opec is achieving 90 per cent compliance rates, compared with an expected rate of 75 per cent. Adherence to the tighter production quotas has helped ease the oil glut, which saw prices reach their lowest in a generation at the start of this year.
Oil prices have also been helped by larger than expected reductions in non-Opec production and increased demand, driven by continuing economic growth in the US and the recovery in a number of emerging economies. In a report earlier this week the influential, Centre for Global Energy Studies - a London-based think tank run by the former Saudi oil minister Sheikh Ahmed Yamani - said it expected world demand for oil to grow by 1.5 per cent this year, almost double last year's increase.
Standard & Poor yesterday revised upwards its assumptions about oil prices, forecasting that West Texas intermediate crude would average between $16 and $19 for the rest of this year and 2000 with Brent trading at a discount to those prices of $1 to $1.5.
Despite Opec's reassuring noises, doubts remain as to how many of its members will be able to resist the temptation to cash in on the surge in prices. "There's a feeling that if Brent is much above $20 going into their September meeting, then Opec might leak more oil onto the market," said Tony Machacek, an oil broker with Prudential Bache.
Last week Venezuela and Nigeria - two countries with a bad reputation for failing to abide by quotas - were forced to deny speculation that were planning to boost production.
- 1 The truth about 'girl things': Three cheers for Heather Watson's honesty
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Tennis fan suing Australian Open organisers for 'failing to shade spectators' during Murray match
- 5 Syrian refugee child beaten by Istanbul Burger King manager for eating customer’s leftover food
Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Rob Lowe hits out at White House decision not to meet Israeli leader
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign
Winston Churchill: From accusations of anti-Semitism to the blunt refusal that led to the deaths of millions
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...