U.S. Fears OPEC Production Cut

Monday, January 15th 2001, 12:00 am

By: News On 6

DUBAI, United Arab Emirates (AP) â€” With OPEC expected to agree on Wednesday on a production cut of at least 1.5 million barrels a day, the U.S. energy secretary said rumored production cuts of 2-3 million barrels a day would be too much.

``Our data shows that production cuts of 2 million to 3 million per day as some are suggesting will be unhealthy and will (cause) prices to rise,'' Secretary Bill Richardson said late Saturday while touring the Persian Gulf to try to persuade oil producers to keep a lid on prices.

Richardson arrived in the United Arab Emirates on Sunday and was also scheduled to visit Qatar and Kuwait.

Richardson said Saudi Arabia promised to consider the U.S. concerns and told him no decision would be made before leaders of the Organization of Petroleum Exporting Countries meet Wednesday in Vienna.

``Just as the American administration was looking out for its own interests as a consuming country, we too are looking for our own interests as producing nations,'' Obaid bin al-Nasseri, Richardson's counterpart in Dubai, said after their meeting. ``Oil prices decreased last month by 30 percent, which caused concern for producers.''

In Venezuela on Sunday, President Hugo Chavez said ``the (production) cut is coming ... to bring back fair prices.'' Chavez said $30 a barrel is a ``fair'' price for crude. Since taking office in February 1999, Chavez has spearheaded the process to unify the 11-member oil cartel.

For his part, Richardson is trying to persuade producing countries to keep the price of oil at about $25 to $28 a barrel, which he called ``the ideal price for producers and consumers.''

Oil prices have been on the rise following reports that OPEC might cut production. On Friday, light sweet crude oil rose 64 cents to $30.05 a barrel on the New York Mercantile Exchange. In London, the price of Brent crude rose 14 cents a barrel to $25.75.

OPEC's Secretary-general Ali Rodriguez said Friday that OPEC estimates current excess supply in the market at about 1.4 million barrels a day. OPEC, which produces about 40 percent of the world's oil, is concerned that replenished inventories will coincide with warm weather in consumer countries in the second quarter, lowering demand and triggering a price crash.

Kuwaiti Oil Minister Sheik Saud Al Sabah reiterated in an interview published in Kuwait Sunday that his country wants a production cut of 1.5 million barrels a day.

``We welcome the visit of the American secretary,'' Sheik Saud, who was to meet with Richardson later Sunday, told Al-Anba daily. ``However, we already have an agreement to cut production by 1.5 million barrels a day.''