Raising output above quotas a 'violation'

Tehran |Reuters | 22-03-2003

Opec price hawk Iran said yesterday any increase in the group's oil output would be a "violation" since no decision had been taken to raise its quota limits at Opec's meeting earlier this month.

After a dramatic oil price fall over the past week, many Opec states are now worried that recent output hikes above quota may have created a glut in the world market.

"Any increase in output limits by Opec members above the present quota of 24.5 million barrels per day would be considered a violation by its members," Hossein Kazempour Ardebili, an adviser to Iran's oil minister, told the official IRNA new agency.

Opec Secretary-General Alvaro Silva said on Thursday that members have been authorised to use their spare capacity to make up for the shortage of Iraq supply.

"Countries are authorised to use their spare capacity and they are ready to use it if necessary," Silva said.

But Kazempour Ardebili said Silva's comments were out of line with Opec's agreed policy. "The Opec general-secretary is not authorised to say this and it is Opec that could decide about it and none of the Opec ministers approved it," he told state television.

"It is giving a green light to America to launch an attack and none of the Opec members wants to give a green light to attack another Opec member," he said.

Silva also said markets were "more than well supplied" and other Opec officials have spoken of a possible big cut in production if the stoppage in Iraqi exports proves to be short-lived.

Opec President Abdullah Al Attiyah said on Thursday the exporter group saw no need to pump more oil into a saturated market.

"It would be economic suicide to increase output at this time... unless something drastic happens like oilfield sabotage, prices will continue to decline," an Opec source said.

Some Opec members, particularly Saudi Arabia, have increased output sharply in recent months to cover for a strike in Venezuela and cool an oil price spike ahead of the U.S.-led attack on Iraq.

Iranian Oil Minister Bijan Zanganeh at last week's Opec meeting led opposition to a proposal by some members to suspend quotas in the event of a war in Iraq. He argued that the group should resist decisions which gave implicit backing to the U.S.-led military attack.

The quota suspension proposal was not approved in the Vienna meeting, but all 11 members agreed to ensure that markets were well supplied.

Kazempour Ardebili said any decision to alter Opec's quota limits could only be taken at an emergency meeting of Opec ministers.

"In the recent (Opec) meeting the members extended the 24.5 million bpd quota and any other decision needs an emergency Opec meeting," he said.

"The present situation in the market shows that there is no shortage of oil and the fall in the price proves that," he added.

Oil has lost a quarter of its value in a week as the U.S.-led war on Iraq began, lifting uncertainty over the war.

Opec's reference price stood at $26.51 on Thursday, having dropped back into Opec's $22-$28 target range on Wednesday for the first time since December.