VIENNA Saudi Arabia urged calm at an OPEC meeting here on Sunday where fears of an impending crude oil glut have raised the prospect of a cut in production.
"It is just a matter of time. We have it under control," Saudi Arabian Oil Minister Ali Naimi told journalists during a morning jog before a meeting of the 11-nation Organization of Petroleum Exporting Countries.
"The prime objective is a reasonably stable market." According to an AFP report, the ministers were not expected to make specific decisions about future crude oil production, which was raised at the end of last month for the fourth time this year to bear down on sky-high prices.
But OPEC members said they planned to discuss rising concerns that supplies were racing ahead of next year's expected demand, threatening a price collapse and possible production cuts.
The Paris-based International Energy Agency (IEA) reported last week that at current OPEC production levels, supply would exceed demand by 1.3 million barrels a day by the first quarter of 2001.
Algerian Energy and Mines Minister Chakib Khelil called for preemptive action.
"It is better to take a decision in time; it is easier to cut production by one million barrels a day than by two million," Khelil told AFP in an interview the previous day.
Saudi Arabia's minister also raised the possibility that ministers could override a loosely-applied price band mechanism to prevent a further increase in output at the end of November.
The mechanism triggers an output increase if prices remain over $28 a barrel for 20 working days or a production cut if they persist below $22 for 10 consecutive working days.
The system led to a rise in production of 500,000 barrels a day at the end of October.
OPEC should take preemptive action to cut oil output if a supply glut emerges rather than waiting for prices to tumble before acting, AFP quoted Qatar's Oil Minister Abdullah al-Attiyah as saying.
Speaking to journalists ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC), Al-Attiyah said the 11-nation cartel should override its price stabilization mechanism, which theoretically triggers output hikes when prices are high and cuts when they are low.
Al-Attiyah echoed the fears that other OPEC ministers have expressed about excess supply by saying that the group would "have to look very carefully" at analyst forecasts of a production glut early next year.
"If we have more supply in the market, what will happen next year?" he said.
"If it happens that there is a lot of production (surplus) in the second quarter and the oil price drops sharply below $22 we will have to cut production ... so we try to avoid" that, Al Attiyah said.
Asked whether OPEC should wait until the price mechanism system triggers a cut when prices fall below $22 a barrel he said "I hope not." The mechanism triggers an output increase if prices remain over $28 a barrel for 20 working days or a production cut if they persist below $22 for 10 consecutive working days.
Oil ministers here are juggling the current situation of high prices, which would demand another hike at the end of November under the price mechanism, with forecasts of a supply surplus next year which could bring prices crashing down.
Many have said that the price mechanism should be overridden so as not to trigger another output hike at the end of November.
"We did discuss it in this way but my personal opinion is that we should be very careful to relate the mechanism to the inventory or the supply," said Al Attiyah.