OPEC sees chance of output cut in spring

www.iht.com Bloomberg News Monday, February 3, 2003   ABU DHABI OPEC, which supplies one-third of the world’s oil, may cut output in the second quarter to prevent a drop in prices as demand slows, the oil ministers for the United Arab Emirates and Libya said Sunday.

Ali Naimi, oil minister of Saudi Arabia, and his Qatari counterpart, Abdullah ibn Hamad Attiyah, who is also president of the Organization of the Petroleum Countries, said Saturday that supply might exceed consumption by as much as 3 million barrels per day after the Northern Hemisphere winter ends.

‘‘We definitely are concerned for the second quarter, because typically demand declines during that period,’’ Obaid ibn Saif Nasseri, oil minister of the Emirates, said Sunday. ‘‘If we see the danger of a drop in oil prices, we will meet to rectify the situation.’’

Most members of OPEC are now pumping near their limit in an attempt to lower prices from more than $31 a barrel in New York and London, a two-year high. Prices have surged two-thirds in the past year because of a strike in Venezuela, traditionally OPEC’s No. 3 producer, that has crimped that country’s oil output, as well as concern over a possible U.S.-led attack on Iraq.

Oil prices in New York have held above $30 a barrel for six weeks, the longest period in two years. A drop of $5 to $10 would ease pressure on economies in the United States and Europe, where growth has slowed and oil demand has stagnated since 1999. The unemployment rate in the United States, the world’s largest oil consumer, has risen to 6 percent. In Germany, one in 10 workers is jobless. OPEC next meets March 11.

‘‘If in March there are signs that demand is stable and prices decline sharply, OPEC will react to reduce production,’’ said Abdulhasid Mahmoud Zlitni, the Libyan oil minister. ‘‘The current buildup in global oil stocks will have a negative impact on prices.’’

The 11-member oil cartel may struggle to replace Iraqi oil should the country’s production be curtailed by an attack, Nasseri said. Only Saudi Arabia and the United Arab Emirates hold significant spare capacity, analysts say.

‘‘If there is a total disruption of oil infrastructure in Iraq, it will be very difficult for OPEC to replace that production,’’ Nasseri said. President George W. Bush of the United States has said that his administration is ready to attack Iraq, which holds the world’s second-largest oil reserves, if President Saddam Hussein does not give up his quest for weapons of mass destruction.

Saudi Arabia stands ready to fill any shortages in the market caused by a war, Naimi said Saturday. Iraq pumped 2.3 million barrels of oil a day in December, making it OPEC’s third-largest producer, according to Bloomberg estimates.

‘‘We will supply the shortages up to our capacity, whatever the source of the shortage,’’ the Saudi minister said. The kingdom has 2 million to 2.5 million barrels a day of idle capacity, he said.

Venezuela’s opposition leaders have called on most striking workers to abandon a two-month walkout and return to their jobs for a few hours a day, evidence that President Hugo Chavez has outlasted those who wanted to depose him.

Because of the strike, Venezuela is pumping about 1.5 million barrels of oil a day, or about half as much as in November, the state oil company said Friday. Striking oil workers say production is about 1 million barrels a day.