Opec plans oil production cuts - Venezuela is Opec's third largest supplier

news.bbc.co.uk Tuesday, 4 February, 2003, 13:00 GMT By Andrew Walker

BBC Economics correspondent The president of the oil producers organisation Opec has said that supplies from most of the group's members might be cut when the organisation meets next month.

Abdullah al Attiyah, who is also the oil minister of Qatar, that there could be a three million barrel a day glut in the near future.

Opec members

Algeria Indonesia Iran Iraq Kuwait Libya Nigeria Qatar Saudi Arabia United Arab Emirates Venezuela

Opec's planning has been disrupted for the past two months by a strike in the oil fields of Venezuela, the group's third largest supplier.

Now output is gradually climbing in Venezuela, and some officials suggest it could be in the region of two thirds of normal production.

In addition, the oil market is approaching a time of the year when demand is relatively weak - when the northern hemisphere winter ends but before the summer motoring season gets underway.

Covering a shortfall

Opec officials fear the result of these two developments could be excess supplies and a price crash.

So several of them, including the group's president, have been suggesting that cuts in production quota are likely when they are discussed at a meeting next month.

The return of Venezuela to something approaching normal production, if it is sustained, is also significant in the context of a possible war in Iraq.

It would then be possible for Opec's dominant force Saudi Arabia to make good any shortfall resulting from the loss of Iraqi oil deliveries.

Saudi Arabia does not have sufficient spare capacity to cover for production shortfalls in both Iraq and Venezuela at the same time.