Speculations about an imminent war make the prices very fragile - OPEC ministers: Markets have adequate supplies

www.middle-east-online.com First Published 2003-03-11, Last Updated 2003-03-11 16:13:44 By Leigh Thomas - VIENNA   Al-Nuaimi sees no need to change OPEC's production quota, says high oil prices are due to war threats.

OPEC heavyweight Saudi Arabia said the organisation would do its best to stabilise oil markets rattled by threats of war in Iraq, as oil ministers prepared to meet Tuesday in Vienna.

Saudi Oil Minister Ali al-Nuaimi said global oil markets had adequate supplies and pledged the Organisation of Petroleum Exporting Countries would ensure there remained enough to cover demand.

"There is enough oil on the market and we will make sure there is enough," Nuami told reporters ahead of the meeting.

OPEC President Abdullah bin Hamad al-Attiyah of Qatar echoed that analysis.

"For the time being we don't feel there is a shortage in the market," he told reporters late Monday.

Al-Attiyah explained that after speaking with clients he understood they also felt enough oil was currently available.

OPEC ministers are expected to agree Tuesday on maintaining the cartel's overall output ceiling of 24.5 million barrels per day, rolling over a 6.5-percent increase introduced at the start of February to compensate for disruption to supplies from strike-hit Venezuela.

The Qatari minister said OPEC currently had additional capacity of "about three million" barrels per day.

But since oil markets were adequately supplied, al-Nuaimi said there was no need to change OPEC's production quota system.

"There is no reason to lift the quotas," he told reporters ahead of the meeting.

Commerzbank analyst Jon Rigby said Monday in London that sticking with the standing arrangement was the most likely outcome because "there isn't a great deal of new capacity to be introduced."

"The second thing is that the market is probably reasonably well supplied at the moment, simply because we are now moving towards the second quarter when demand typically falls for seasonal reasons," he said, referring to spring in the northern hemisphere.

Despite the OPEC assurances, oil prices climbed to a new two-and-a-half-year high in London Monday before falling prey to profit-taking.

The price of a barrel of Brent North Sea crude oil for April delivery fell 26 cents to 33.77 dollars a barrel after spiking to a two-and-a-half year high of 34.55 dollars.

New York's benchmark light sweet crude April-dated futures contract dipped 51 cents to 37.27 dollars a barrel.

Bin Hamad al-Attiyah said that the threat of war in Iraq was adding between six to seven dollars per barrel.

Al-Nuaimi said oil prices would stabilise once the threat of war was lifted.

"Eliminate the drummings of war and the price will moderate," he said.

OPEC would do its part to stabilise volatile oil markets to underpin global economic growth, he said.

Al-Nuaimi said OPEC's goal was to "make sure we have a fair price for everybody".

"And that fair price should allow reasonable world economic growth so that demand is not killed," he added.