Majority of OPEC support keeping status quo, Iran isolated


By Perrine Faye
AFP
VIENNA
Petroleumworld.com 01 30 06

A majority of the powerful OPEC cartel wants to keep oil production at a near 25-year high at meeting in Vienna on Tuesday because of elevated fuel prices, despite calls from Iran to cut output.

Edmund Daukoru, president of the Organisation of the Petroleum Exporting Countries, reiterated his desire to maintain the production ceiling at 28 million barrels per day as he arrived in the Austrian capital on Saturday.

"With prices above 67 (dollars per barrel), I would personally not see a need to cut" the quota, said Daukoro, who is also Nigeria's oil minister.

He was the first energy leader from the 11-nation OPEC group, which pumps about 40 percent of the world's oil, to arrive in Vienna ahead of the meeting.

His colleagues, including king pin Saudi Arabia's Oil Minister Ali al-Naimi, are due to touch down from Sunday.

The price of oil, which hit a record high of 70.85 dollars a barrel at the end of August, has rebounded in the past two weeks on fears over production in Nigeria and Iran. A barrel of light sweet crude oil closed on Friday in New York up 1.24 dollars at 67.5 dollars.

Nigeria, the world's sixth largest exporter of oil, is plagued by security problems along the Niger Delta to the south, where there have been a series of attacks against foreign oil companies. As a result, production in the country has been cut by more than 200,000 barrels per day.

As for Iran, the fourth largest oil exporter in the world and an influential member of OPEC, its decision to resume uranium enrichment activities earlier this month sent a wave of panic through the oil market.

Traders fear Tehran may threaten to cut its vital oil exports if the country is taken before the United Nations Security Council for possible sanctions over its nuclear programme.

Washington has accused Iran of using its nuclear programme to generate electricity as a cover for developing atomic weapons. Tehran denies the claim.
Without directly brandishing the oil weapon, Iran has already called on OPEC to reduce oil production by one million barrels per day at the Vienna meeting.

Iran, however, looks fairly isolated with this stance. More than half of OPEC's members -- Nigeria, Saudi Arabia, Algeria, Indonesia, Iraq and Venezuela -- have already indicted their desire to maintain the status quo, citing the stubbornly high price of oil.

Naimi said on Thursday that Saudi Arabia, the world's top oil exporter, saw no reason to change current output levels. He also blamed high global oil prices on political developments and a lack of adequate refining capacity.

"What is driving it are events like Nigeria and the tension between Iran and the industrialised countries with respect to developing nuclear energy," said Naimi.

"If we are able to eliminate all factors that cause volatility, then crude prices will be in the range of 40 to 60 dollars per barrel."

Daukoru, who holds OPEC's rotating presidency title, tried to distance himself from the growing nuclear crisis between Iran and a number of Western countries, namely the European Union and the United States.

"OPEC is not part of the misunderstanding between Iran and the Western democracies," he said.

"I don't want to treat the Iran case as some kind of emergency that would call for an emergency response," he told reporters.

OPEC, however, has said it is ready to increase production if Iran interrupts its oil exports.

By chance, the International Atomic Energy Agency, the UN's nuclear watchdog, is due to gather in Vienna two days after the OPEC meeting to decide whether to refer Iran to the Security Council.

Despite the sound-bites calling for production levels to be held tight, the OPEC cartel may still decide to lower overall production at a later date, such as the second quarter.

At this time, the cold winter months in the northern hemisphere will have drawn to a close, reducing demand for energy and lowering prices.
OPEC is due to meet again on March 8.

AFP 01/29/06

Copyright © 2006 AFP. All rights reserved

 

 

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