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OPEC to keep gushing oil
By Jitendra Joshi
AFP
CARACAS
Petroleumworld.com 06 01 06The OPEC cartel looks set to keep its oil output at full flow, reluctant to disturb a record-breaking market that is reaping its 11 members a bonanza of petrodollars.
Ministers of the Organization of the Petroleum Exporting Countries will meet here Thursday, giving Venezuela's populist President Hugo Chavez a stage to hurl more anti-US invective if he wishes.
Venezuela, the only Latin American member of a group dominated by Middle Eastern producers, had been calling for the cartel to cut its total production quota from a 25-year high of 28 million barrels per day.
But Venezuelan energy minister Rafael Ramirez toned down his appeals Monday, calling instead for the cartel "at least to maintain" current levels of production even if global supplies are plentiful.
Other OPEC members including heavyweight producer Saudi Arabia have rejected any cut in output. Even Iran, Venezuela's anti-US soulmate in the group, has dismissed the idea, which would drive oil prices up still further.
While higher prices would earn producers more, they could also kill economic growth in voracious oil consumers such as the United States.
"I think OPEC has nothing (to do) except to roll over (existing production) at this time," Qatar's Energy Minister Abdullah bin Hamad al-Attiyah said Tuesday.
"I don't believe there is a shortage of oil at all," al-Attiyah added, arguing that prices have been driven up by geopolitical tensions and by speculation.
Ramirez said: "The threats to Iran affect the price level more than any decision we could adopt about the levels of production."
OPEC members argue that they are powerless to rein in a speculative frenzy resulting from tensions over Iran's nuclear ambitions and unrest in Nigeria.
They have repeatedly said it is up to the United States and other consumer nations to boost their refining capacity to process more crude into gasoline, diesel and heating oil.
Rocketing demand for energy from fast-growing China and India has also stoked the oil market's startling rally of recent years.
But talk of a cut to OPEC's production quotas might get a better hearing down the line if the world economy slows down this year, as many expect.
"As long as prices are hanging above 70 dollars a barrel, the likelihood of a production cut by OPEC is virtually zero," Alaron Trading energy analyst Phil Flynn said.
"But I do think that a lot of the OPEC producers are going to be concerned about the talk of slowing demand. So it wouldn't surprise me if they drop hints of a possible cut somewhere down the road," he said.
And Venezuela, backed by Iran, is likely to persist with proposals to price oil in euros rather than dollars. Chavez also says that OPEC should reinstate a minimum target price for a barrel of oil, of 50 dollars.
OPEC's member countries -- Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela -- hold about two-thirds of the world's oil reserves.
They supply 40 percent of the world's oil production and half of its exports.
Heading into the Caracas meeting, the cartel is under pressure from the Group of Seven club of rich nations to do more to limit the potential of a global slowdown caused by high oil prices.
However, acting OPEC secretary-general Mohammed Barkindo said Tuesday that the US and world economies show every sign of shrugging off the sky-high prices.
"There has been no significant evidence that these oil prices have an effect on growth," the Nigerian official told reporters in Caracas.
In any case, OPEC members with the exception of Saudi Arabia are pumping out all the crude they can. Many are flouting the cartel's official quotas so that they do not lose out on the market boom, analysts say.
AFP 31 1037 GMT 05 06
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