OPEC urged to keep quotas steady

www.theage.com.au March 7 2003 By Grace Nirang Jakarta

OPEC should keep its production quotas unchanged until the producer group knows the result of the confrontation between the United States and Iraq, says Purnomo Yusgiantoro, Indonesia's Energy Minister.

The Organisation of Petroleum Exporting Countries, which meets on Tuesday to discuss production policy, should wait to see the effect on oil prices of US military action in the Middle East before deciding whether to change quotas, he said.

Saudi Arabia, the United Arab Emirates and Kuwait wanted to increase quotas.

"We want OPEC not to make any decision, especially on quotas, because the situation is very uncertain at the moment," Mr Purnomo said.

Ten OPEC members, all except Iraq, are responsible for setting output quotas to control oil prices and supply. The group raised quotas twice this year in a bid to meet the shortfall from Venezuela and would probably leave them unchanged next week, OPEC secretary-general Alvaro Silva said.    advertisement       advertisement

Oil prices in New York have risen 18 per cent this year to $US36.80 a barrel after industrial action in Venezuela cut supplies, and on concerns that the US will attack Iraq.

Mr Purnomo said Saudi Arabia, the UAE and Kuwait had promised to make up any shortfall in case of a war.

"Those countries have stated that they are ready to fill the shortage from Iraq if war breaks out," he said. Mr Purnomo said OPEC should suspend its target range of $US22-$US28 a barrel, which has become unworkable because of the war threat.

OPEC has an informal agreement to raise production should its benchmark oil price remain above $US28 a barrel for 20 consecutive trading days, or lower it should the price stay below $US22 a barrel for the same period. The benchmark oil price has been at $US32.12 a barrel this week and has not gone below $US28 a barrel since December 13.