Opec ministers holding their mid-year meeting in Vienna blamed extra oil production by Britain and Norway for their inability to defend oil prices. The price of the benchmark Brent crude oil dropped to an 11-month low, below the psychologically important $17-a-barrel level, as ministers hinted that Opec might retaliate by lifting current output ceilings some time next year.
Qatar's oil minister, Abdullah bin Hamad al-Attiyah, said: ''The North Sea is producing more and more, putting huge quantities into the market.''
Britain's North Sea output is currently a record 2.6-2.7 million barrels a day (mbd), Norway's at a record 3 mbd . Although the US and former Soviet Union remain the world's biggest non-Opec producers, North Sea oil production has been growing fastest.
''If we want a stronger price in the market, it is not only Opec's responsibility,'' Gholamreza Aghazadeh, Iran's minister, said yesterday.
But Britain rejected any notion of government involvement in an attempt to support the price. ''Companies produce the oil and the market sets the price,'' said spokesman for the Department of Trade and Industry.
The Opec ceiling of 24.52 mbd has remained unchanged since September 1993. Nearly three-quarters of the increase in world oil demand since that date has been captured by extra non-Opec production.
As a result the price has stayed below $18 a barrel for most of the past two years, and dipped as low as $12 at the beginning of last year. Opec ministers hope to persuade their counterparts outside the organisation that raising prices by limiting output would be in their mutual interest.
''The oil price will struggle to keep pace with inflation,'' said Geoff Pyne of UBS in London. He said the growth in demand for oil was not high enough to push up the price. Opec's salvation would lie in an eventual surge in demand from newly industrialising countries.
Most analysts do not think an Opec threat to abandon its production ceiling would have any credibility. However, the price of Brent crude for delivery in August fell to $16.97 a barrel from $17.33 on Friday.Reuse content