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How Would an OPEC Production Cut Affect the World Markets?

Aired January 11, 2001 - 1:47 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NATALIE ALLEN, CNN ANCHOR: The Organization of Petroleum Exporting Countries -- you know that as OPEC -- will meet next week to consider production cuts. Now, critics say oil prices are too high already, and production cuts will make them even higher, and could throw the world economy into a recession.

The oil minister of Iraq is General Amer Rasheed. He joins us from Baghdad. General, thank you for being with us.

GEN. AMER RASHEED, IRAQI OIL MINISTER: It is a pleasure, Natalie.

ALLEN: Is -- thank you. Is OPEC concerned about what its action could do -- could mean to the U.S. economy and, hence, the world economy?

RASHEED: It has been always the objective of OPEC, and almost every member of it to maintain market stability and to have prices which are fair to the -- our countries and as well as fair to the consumer countries and consumer companies. So, we are not in any way affecting the world economy or trying to create a recession; rather, we want to defend normal, fair prices, which are a result of market fundamentals and that is demand and what is available from our countries.

So, we think what has happened in December is contrary and counterproductive to the interests of producing countries of OPEC as well as consumers, so what we are trying in the meeting of 17th of January in Vienna to reduce production so that we get back to the balance between supply and demand. That's all we are trying to do. And we think something like 1.5 to 2 million barrels a day would be a good figure.

ALLEN: And so, when U.S. Energy Secretary Bill Richardson comes to the Persian Gulf to try and Persuade OPEC members prior to the meeting you talk about, January 17th, to not cut it severely, you think he will be listened to then?

RASHEED: I think these moves by Bill Richardson will be counterproductive because the more the political manipulation of the oil market, the more we have crisis and we have fluctuation in the prices. If we leave the market by its own to control itself, it would be much better, not only for the producing countries, but also for consumer countries. We all record the example of drawing from the Strategic Reserve by --under the suggestion of Bill Richardson and we all know the result; prices will continue to score high because it created a feeling, a psychology in the market which motivated speculation by traders.

So, it is counterproductive. We will not agree to the pressures which are exercised by the American administration and OPEC. It is high time they give up such measures. ALLEN: Iraq said, General, back in December, that it didn't want to sell oil to the United States. Is that still the position?

RASHEED: We have always had the U.S. market as one of our main markets; 40 percent of oil exports is to the United States market. But this was a measure which was taken precautionary in case there are any political involvements which initiates cutting supplies to the U.S., so our leadership and our government will take the necessary measure in due time. There is no such instruction at this time now, presently.

ALLEN: All right, General Rasheed, this isn't about oil, but it's a story that we have been reporting today. And since you are a very high official there in the Iraqi government, I wanted to see if you could comment on the U.S. Navy now saying that one of its pilots, perhaps, was not killed in action during the Persian Gulf War. That's Lieutenant Commander Michael Speicher.

Now they list him as missing in action because of U.S. intelligence that showed a man-made symbol at the scene of that crash site. And reportedly, that crash site had been excavated, apparently, by the Iraqis. And the United States government is seeking information from the Iraqi government now about this. Is there anything you can add to this story. Or do you know if the government has responded?

RASHEED: I am -- I am really sorry. I am really unaware of the background of this -- of this event. I apologize not to be able to comment.

ALLEN: All right, well, we thank you anyway. And we thank you for joining us.

RASHEED: I am unaware of the...

ALLEN: Thanks, General Amer Rasheed,

RASHEED: Thank you.

ALLEN: Thank you very much.

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