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Posted on  

March 14, 2002

Oil ministers see no need to boost OPEC crude output

By BRUCE STANLEY - AP Business Writer

VIENNA, Austria (AP) -- OPEC's current level of crude production is sufficient to meet demand, several of the group's oil ministers said Thursday, even as market fears about possible U.S. military action against Iraq was pushing crude prices higher.

The Organization of Petroleum Exporting Countries will assess its output policy when its representatives meet Friday in Vienna. Ministers' comments ahead of the meeting confirmed the expectation of many analysts that the oil producers' group will leave untouched its current output target, or ceiling, of 21.7 million barrels a day.

"It is too early to talk about raising the ceiling," said Obaid bin Saif al-Nasseri, oil minister for the United Arab Emirates, as he arrived at a hotel in the Austrian capital.

Iranian Oil Minister Bijar Namdar Zangeneh echoed that view, and his Venezuelan counterpart went so far as to dismiss the idea of boosting production even at a possible OPEC meeting in June.

"Not in June and not now," Venezuelan Oil Minister Alvaro Silva told reporters.

OPEC, which supplies about a third of the world's oil, cut 1.5 million barrels from its daily target in January, in the most recent of a series of output cuts aimed at propping up weak prices.

Recent signs of a rebounding economy in the United States, the biggest consumer of crude, have helped since then to firm up prices. So too has speculative buying of futures contracts on concerns that a U.S.-led attack might knock OPEC member Iraq out of the export market.

Contracts of North Seas April Brent crude were trading 41 cents lower at $23.48 on the International Petroleum Exchange in London, after closing 19 cents higher on Wednesday.

OPEC's benchmark price for a blend of seven different crudes rose 1 cent to $22.37 a barrel on Wednesday, the most recent day for which the group compiled information.

The OPEC benchmark price had languished since late September at well below the group's desired minimum price of $22 a barrel, until breaking through that psychologically important threshold on Monday.

Heartened by the price increase, Zangeneh of Iran said OPEC's minimum price target of $22 was "still valid."

Al-Nasseri went further, expressing support for OPEC's preferred price of $25 a barrel. OPEC had abandoned that price as unrealistic when the global economy went into its slump last autumn.

"I think around $25 on average is fair," Al-Nasseri said.

However, Algerian Oil Minister Chakib Khelil warned that current price trends were uncertain.

"Right now, things are very fragile," he said earlier. Khelil argued that the recent strengthening in prices owed much to tensions in the Middle East. The market's nervousness about a possible military strike against Iraq has added a $3 premium on each barrel of crude, he said.

Some analysts have said OPEC will need to reverse its policy and increase production by summer so as not to cause a spike in oil and gasoline prices during the peak driving season in the United States and Europe. Khelil said OPEC members probably would meet again in June to consider such action.

Another concern for OPEC is Russia, the world's third-largest oil producer after Saudi Arabia and the United States.

Russia agreed -- reluctantly -- in December to support OPEC's production cuts by trimming its own exports by 150,000 barrels a day. It agreed to do so only for the first three months of the year, and OPEC has tried hard to persuade the Russian government and oil companies to extend their cooperation through the second quarter, when global demand for oil typically ebbs.

OPEC Secretary General Ali Rodriguez and President Rilwanu Lukman visited Moscow earlier in March to press their case that too much Russian oil would drag prices down for all producers.

 

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