OPEC May Cut Oil Output in March to Counter Surplus

www.riyadhdaily.com.sa Davos, Switzerland [AFP]......................

The president of the Organisation of Petroleum Exporting Countries (OPEC) said on Saturday the oil cartel could consider a cut in output when it meets in March, to counter a potential surplus in supply. "By March we will see a three million (barrels per day, bpd) surplus... For sure if there is a surplus we will look at cutting (output)," OPEC President Abdullah bin Hamad Al-Attiyah told AFP. He was speaking on the margins of a meeting on security of oil supply in the light of a possible war on Iraq, on the third day of the World Economic Forum in Davos, Switzerland. Attiyah, who is Qatar’s Minister of Energy and Industry, told the forum there was speculation that a US-led war on Iraq could take 2.5 million bpd off the market and OPEC had reacted to balance demand and supply by raising production several times over past months. But OPEC customers were not short of oil. "There is no shortage of supply," he said. I asked (consumers) one question: ‘Do you need more oil... ?’ They answered no.

"On March 11, when OPEC will meet again, I think they (OPEC) will face a lot of difficulties with a huge surplus of oil." The possibility of an end to a lengthy oil workers’ strike in heavyweight Venezuela and the reduction in the need for heating fuel as the northern hemisphere winter drew to a close meant there could be two million bpd back on the market shortly, he said. Attiyah said fears about security of supply-that this week pushed world oil prices beyond the OPEC price band of 22-28 dollars a barrel to around 33 dollars-were not always well founded. "Security of supply will be questioned continuously, sometimes for reality and sometimes for business, sometimes for speculations on future markets. We will see many people making a lot of profits, a lot of money in the name of security of supply," he said. In New York, light sweet crude March-dated contracts rose to 33.28 dollars per barrel on Friday. The price of benchmark Brent North Sea crude oil for March delivery closed up at 30.25 dollars per barrel in London.

Traders said no-one wanted to be short ahead ahead of a key report on Monday by the chief UN weapons inspector Hans Blix on his team’s work in Iraq, which Washington accuses of developing weapons of mass destruction. Saudi Oil Minister Ali Al-Nuaimi told the Davos meeting OPEC’s aim was to reduce the world price of crude oil to 25 dollars a barrel. "We will try to get it back to 25," he said. Nuaimi said the threat of a US-led war on Iraq was pushing world crude prices higher because of fears that the Gulf region would be unable to deliver, although history had always proved the contrary. He said there were many variables affecting the price of oil and all OPEC could do was to act on those that were within its power. "We have no control if someone decides to pick a war with someone else that is a major producer. All we can do is see if we can replace that supply," he added. Saudi Arabia is the world’s largest oil producer and exporter and Iraq possesses the globe’s second largest proven reserves.