OPEC seen maintaining oil output despite Venezuela's call for cut



By Zoltan Simon
AFP
VIENNA
Petroleumworld.com 03 08 06

OPEC was set to keep crude production at near capacity at its meeting here on Wednesday in a bid to cool off stubbornly high oil prices caused by uncertainty in key cartel members Iran and Nigeria.

Most members of the 11-nation Organization of Petroleum Exporting Countries, which produces 40.0 percent of world crude, said Tuesday that they favoured keeping output at 28.0 million barrels per day, a near 25-year-high.

Only Venezuela has asked for a 500,000 barrels per day cut, arguing that the oil market is oversupplied.

But OPEC President Edmund Daukoru, who is also Nigeria's oil minister, said uncertainty over Iran's nuclear research and unrest in Nigeria had driven up prices and would likely lead the cartel to maintain the current quota level.

"If we only followed strictly market analysis we should be doing some trimming of volume," said Daukoru on Tuesday after issuing the recommendation of OPEC's key advisory committee, which comprises Nigeria, Iran and Kuwait.

"But there are simply too many geopolitical issues at this very time so we (the committee members) have agreed to roll over (production quotas) and to monitor closely if there are any further developments," Daukoru said.

The committee only issues a recommendation, but these are frequently followed by OPEC member states.

Oil kingpin Saudi Arabia had already on Monday called for maintaining the cartel's quota level. Algeria, Kuwait and the United Arab Emirates have also said they favoured no change.

World oil prices fell Tuesday owing to the likely prospect that OPEC will leave its quota untouched.

New York's main contract, light sweet crude for delivery in April, was down 1.01 dollars in late afternoon trade at 61.40 dollars a barrel, having risen at one point on Friday to 63.75 dollars as traders fretted over crude supplies in Iran.

The OPEC meeting on Wednesday comes at a time of market concern that Iran, the second-biggest producer of crude in OPEC, might slash its oil exports if it comes under UN sanctions over its nuclear programme.

Also on Wednesday, the UN atomic energy agency's 35-nation board of governors was due to hear in Vienna a key report on Iran's nuclear programme, which Tehran insists is for civilian energy use but the West fears is a cover to make atomic weapons.

Another factor which has kept prices above the 60.0-dollar per barrel mark has been unrest in Nigeria, where attacks by militants on the country's oil installation has forced a 20.0-percent cut in Nigerian crude production.

Still, OPEC is producing more than 29.0 million barrels of crude per day including output from Iraq, which is not included in the official quota.

OPEC, which is headquartered in Vienna, comprises Saudi Arabia, Iran, Venezuela, Kuwait, the United Arab Emirates, Iraq, Nigeria, Libya, Indonesia, Algeria and Qatar.

AFP 03 08 06

Copyright © 2006 AFP. All rights reserved

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