OPEC sticks with current oil output target, pledges to pump more if supplies disrupted

www.signonsandiego.com By Bruce Stanley 11:40 a.m., March 11, 2003 Associated Press

The members pledged to boost output in the future to keep supplies flowing in case of any serious disruption.

VIENNA, Austria – OPEC members agreed Tuesday to stick with their current quotas for crude oil production but pledged to boost output in the future to keep supplies flowing in case of any serious disruption.

Representatives of the Organization of Petroleum Exporting Countries ruled out formally raising output now as a way of reassuring nervous markets before any U.S.-led attack on Iraq.

However, they took extreme care not to mention such a conflict as a likely source of disruption, apparently afraid of seeming to support such a war by preparing to respond to its possible impact on markets.

Despite sharply higher oil prices, OPEC members argued that the world has enough crude to meet demand and blamed Middle East tensions for causing fears of a possible shortage.

"We are studying the market and keeping abreast of it," Saudi Arabian Oil Minister Ali Naimi told reporters. "There is no shortage of supply, the market is in balance, there is plenty of oil and there is a commitment to do our best within our capabilities, which we think are enough to satisfy any possible 3/8shortage in the market for whatever reason."

OPEC's president, Abdullah bin Hamad Al-Attiyah, confirmed that it was not changing its output target of 24.5 million barrels a day. Delegates planned to meet on June 11 in Doha, Qatar, to review market conditions.

OPEC officials announced their decision after meeting for two and a half hours at the group's headquarters in Vienna, Austria. OPEC pumps about a third of the world's crude.

Markets worry that a conflict with Iraq would halt that country's 2 million barrels in daily exports. The impact on supplies and prices of crude could be more severe if fighting spread beyond Iraq's borders.

"The international political tensions have, without any doubt, reduced OPEC's influence on prices," bin Hamad Al-Attiyah said in a speech to delegates at the start of their meeting.

He said OPEC must make a plan to cope with "any radical change in market conditions which may result from developments in the Middle East." This was as close as OPEC's official proclamations went to mentioning a war against Iraq, one of its founding members.

Comments by Obaid bin Saif Al-Nasseri of the United Arab Emirates on Monday suggested that the United States and other major oil-importing countries might need to rely on their own strategic petroleum reserves. The U.S. alone has a strategic petroleum reserve, or SPR, of 600 million barrels.

"OPEC is working flat out to make sure the market is supplied," said Raad Alkadiri, an analyst at The Petroleum Finance Co., a Washington consultancy.

Alkadiri agreed that the group would be hard-pressed to cover a dual shortfall from Iraq and Kuwait.

"If there are any signs of supply disruptions beyond Iraq's borders, then I think we'll see use of the SPR fairly quickly," he said.

Energy Secretary Spencer Abraham, in Vienna for an International Atomic Energy Agency meeting, appeared to confirm that view.

Asked at a news conference whether the U.S. government would release oil from its strategic reserves, Abraham told reporters: "We are prepared to act very quickly, but only if we believe a severe disruption of supply exists."

The United States and other major importing countries want OPEC to maximize its production if a war threatens supplies. Abraham planned to meet Tuesday evening with Saudi Arabia's Oil Minister Ali Naimi.

April contracts of U.S. light, sweet crude were trading at $36.80 a barrel in New York, down 47 cents from Monday's close. Brent crude futures for April delivery were 58 cents lower at $33.11 in London.