OPEC members may trim oil exports, cartel's president says

Posted on Tue, Apr. 08, 2003 By Alex Lawler Star Telegram-The Associated Press

PARIS - The Organization of Petroleum Exporting Countries will consider a production cut after a 28 percent drop in oil prices in the past month caused by allied progress in Iraq.

"The market is facing a glut, not a shortage," said OPEC President Abdullah bin Hamad al-Attiyah, who is also Qatar's oil minister, speaking to reporters in Paris after meeting with French Industry Minister Nicole Fontaine. "The market is full of oil," he said in announcing an April 24 meeting.

The Brent crude-oil futures contract on the International Petroleum Exchange fell 10 cents to close at $24.58 a barrel. Prices are down from $34.10 on March 7 and are down 9 percent from this time last year as U.S. forces have closed in on Baghdad in the war to oust Saddam Hussein.

OPEC oil output rose in March to the highest level in 18 months, as increases in Venezuela and Saudi Arabia made up for a drop in Iraqi output, a Bloomberg News survey showed. Reflecting the increase, U.S. inventories rose by almost 7 million barrels, or 2.5 percent, in the latest week.

Most members are ignoring their output quotas, designed to keep the group's benchmark price between $22 and $28 a barrel. OPEC exceeded its target by 1.57 million barrels a day, or 6.4 percent, in March. The OPEC president said members are seeking prices at $25 a barrel.

Saudi Arabia, OPEC's biggest producer and the world's top oil exporter, pumped 9.2 million barrels a day in March, the highest in at least 13 years, according to the Bloomberg News survey.

An end to the Iraqi conflict may cause prices to fall below $22 a barrel, the lower end of OPEC's target range, as world output climbs, said the head of Venezuela's state oil company, Ali Rodriguez.

"Iraq could be tempted to boost its production quickly," he told reporters in Caracas, Venezuela. "Prices could fall very abruptly, but I don't see a permanent price collapse."

After raising quotas twice this year, OPEC is considering a meeting at its Vienna, Austria, headquarters. The group, which pumps a third of the world's oil, had been planning its next gathering for June 11 in Doha, Qatar.

Although the attack by coalition forces in Iraq has stopped the nation's oil exports since March 20, world demand in the second quarter normally drops as the Northern Hemisphere spring reduces consumption of heating fuel, offsetting the loss.

Iraq exported 1.4 million barrels of oil a day in the week ended March 7, according to the United Nations, which oversaw the shipments. The International Energy Agency, an adviser to 26 oil-consuming nations, expects demand to slow this quarter by 1.6 million barrels, from the first three months of the year.