OPEC Ministers in Vienna for Crucial Talks

www.riyadhdaily.com.sa Vienna [AFP]......... OPEC oil ministers were arriving in Vienna Monday for a crucial meeting of the 11-nation cartel to discuss possible production increases if case of shortalls on the world market if the United States attacks Iraq. Key oil producers Venezuela and Algeria said they believed the Organization of Petroleum Exporting Countries had enough room for manoeuvre to avoid a supply shortage in the event of war. But UAE oil minister Obaid Al-Nasseri said Monday that it would be difficult for the oil cartel to increase production as it is already at almost full capacity. "I think everybody is producing almost about" full capacity, Al-Nasseri told reporters upon arriving in Vienna. Crude prices have skyrocketed since January because of fears of a war on Iraq, which has the world’s second-largest proven oil reserves, and a general strike in Venezuela, which crippled production there at the start of the year. Some fields in Iraq neighbor Kuwait are also being closed. Oil prices were higher in quiet trading Monday in Singapore. "We are expecting crude to strengthen to 38.56 (US) dollars a barrel in two days," said a trader at Refco Singapore Pte Ltd. New York’s light sweet crude for April delivery was at 38.05 dollars in Asian trade Monday, up from 37.78 dollars on Friday. All eyes were on Iraq and oil supplies from the Middle East, the trader said. Algerian Energy Minister Chakib Khelil said in Vienna that OPEC was in a position to put an additional four million barrels per day (bpd) of crude on the market. When added to the predicted two-million-bpd drop in demand expected in the second quarter of the year, this meant the cartel had six million bpd to play with to stabilize the markets, he said. "There is substantial supply, in particular for the second quarter, when demand will fall by two million (bpd)," Khelil told reporters when he arrived in Vienna. "We have the capacity to add four (million bpd) and so we have six million (in total). So that’s plenty," he said. Oil markets and oil consumers have grown concerned whether the cartel has enough available capacity to avoid possible upsets to global oil supply. The US Department of Energy estimates that OPEC countries excluding Iraq and Venezuela hold between 2.1 and 2.5 mln bpd of excess oil production capacity that could be brought online. "This is the second-lowest spare capacity level in the past three decades, trailing only the low reached in 1991 after the loss of Iraqi and Kuwaiti production," it said in a study published last Thursday. Venezuelan Oil Minister Rafael Ramirez told reporters in Vienna his country’s crude oil output should return to its customary level by the end of March, which would help stabilize the global oil market. "At the moment Venezuela is at 2.65 million bpd and we’re returing to our total production and exports," Ramirez said. He said Venezuela, a founding member of OPEC, would be back to its output quota of 2.918 million bpd "at the end of this month. A source close to OPEC said on Friday the oil cartel was working on a "contingency plan" to provide for shortages on the market if the United States and Britain attacked Iraq. He said OPEC ministers would on Tuesday "see what measures are needed to offset a shortage if there is a military strike in Iraq." He said the oil ministers would decide, in case of war, what to do with the four million bpd OPEC has in excess capacity. OPEC agreed in January to raise its combined output ceiling by 6.5 percent to 24.5 million bpd to try to cool feverish world oil markets.