Saudi Says OPEC Filling Venezuelan Outage

abcnews.go.com — By Peg Mackey and Michael Georgy

VIENNA (Reuters) - Leading OPEC producer Saudi Arabia said on Sunday that the cartel is already responding to a Venezuelan strike and sees no real shortage now on world oil markets.

Saudi Oil Minister Ali al-Naimi said the group was acting to fill what he estimated as a two million barrels per day gap on the international market caused by the six-week-old strike. "There is no shortage. We never allowed the shortage to take place," Naimi told reporters before Sunday's emergency OPEC meeting.

Asked if OPEC was supplying the market right now with all the oil it needed, he said: "Yes, we want to make sure there is no shortage."

Riyadh is trying to prevent the Venezuelan strike, combined with the threat of war against Iraq, causing an oil price spike that would hurt the world economy and hit crude demand. U.S. oil prices recently rose above $33 a barrel for the first time in two years.

Naimi said Saudi, which was estimated in December to be pumping about eight million bpd, could reach 10 million bpd within two weeks.

"We can get to 10.5 right away but to maintain that level we need 90 days to formalize contracts for extra rigs with drilling companies," he added.

Fellow cartel members the UAE, Kuwait, Nigeria and Algeria also held spare capacity, the minister said.

Naimi ruled out any increase at Sunday's meeting of formal limits of 23 million barrels per day for the 10 OPEC members with quotas, simply because Venezuela is out of the market.

"An increase in the ceiling would really flood the market," he said. "At the last December meeting we evaluated the market needing 23 million barrels per day. OPEC made a worldwide commitment. The ceiling is still 23 million barrels a day and we will maintain 23 million barrels a day," he told reporters.

That means that the remaining nine members of the group with quotas, excluding Venezuela and Iraq, are likely to agree a temporary increase, making clear they will reverse the addition once Venezuela returns. Iraq has had no quota since the 1990-1991 Gulf War.

Delegates said ministers might decide simply to announce their intention to make up for the Venezuelan loss without announcing any exact additional volume increase or higher individual allocations.

Ministers so far have said they were discussing a 1.0-1.5 million bpd increase. Naimi would not comment directly on that volume. But he said that with a Venezuelan outage of two million bpd, an increase of 1.5 million bpd would not be enough.