OPEC Pres -3: Sees Possible Oil Glut In 2Q
sg.biz.yahoo.com Saturday February 1, 9:20 PM
ABU DHABI (Dow Jones)--The president of the Organization of Petroleum Exporting Countries said Saturday the there is no current need to further increase the overall oil production of the group because there is enough supply in the oil market.
Abdullah bin Hamad al-Attiayh, who is also Qatar's Oil Minister, said the high oil prices are currently inflated by psychological and political factors related to tensions over oil producers Iraq and Venezuela and not because of shortage of oil supply.
OPEC on Saturday started to implement a decision taken last month to increase production 1.5 million barrels a day to cool off runaway oil prices in a bid to bring them back into a target range of $22-$28 a barrel.
ADVERTISEMENTAl-Attiyah said OPEC's oil ministers remain in constant contact discussing the oil market situation and would hold an emergency meeting for the group whenever they see there is a necessity to do so.
He also welcomed the increasing oil production of Venezuela as a factor which will bring more stability to the oil market.
However, he said that he's concerned that the current high prices may collapse to unfavorable levels if Venezuela production increased to around 2.6 million b/d in the next few weeks, adding this increased output is actually combining with OPEC's latest production increase of 1.5 million b/d which begins Saturday.
OPEC Pres -3: Sees Possible Oil Glut In 2Q
Al-Attiyah said Venezuela is currently producing around 1.00 million b/d and is expected to boost its output to between 1.5-1.6 million b/d in the next few weeks.
A seasonal drop in oil demand of around 2.00 million b/d is expected in the second quarter and al-Attiyah said that as much as 4.00 million b/d of extra crude oil could flood the market, as Venezuela keeps increasing production.
Venezuela's production has been crippled by a nationwide strike since Dec. 2 - which has recently started to ease.
Speaking to reporters on the sidelines of an energy conference scheduled to open Sunday, Al-Attiyah denied analysts' speculation that oil prices would spike to as high as $60-$100 a barrel if a war on Iraq breaks out.
"There is no historical evidence to support this," he said, citing that oil prices never exceeded $40 a barrel during the Iran-Iraq war in the 1980s and the Gulf War in 1991.
Al-Attiyah said the he hasn't talked with the Paris-based International Energy Agency about the prospect of opening up oil reserves of consuming countries to calm the market in the event a war breaks out.
He said OPEC will consider various options at its regular meeting on March 11, including any shortage of supply or a potential oversupply in the international market.
-By Simeon Kerr and Abudlla Fardan; Dow Jones Newswires; 00973 530758; abdullah.fardan@dowjones.com