Oil ticks up as Iran, Indonesia call for OPEC cut
forbes.com-Reuters Reuters, 04.17.03, 3:23 AM ET
SINGAPORE, April 17 (Reuters) - Oil prices crept higher on Thursday in quiet trade ahead of the long weekend holiday and an emergency OPEC meeting next week where producers will discuss possible supply restraints to avert a supply glut.
In the run up to the ministerial talks in Vienna on April 24, Iran warned an oversupply would lead to a collapse in oil prices if not checked, while Indonesia said it would ask OPEC to remove 1.5 to two million barrels of daily production.
U.S. light crude
Traders said dealings were expected to be muted ahead of the Easter holiday weekend. The New York Mercantile Exchange and the International Petroleum Exchange (IPE) will be closed on Friday and the IPE will remain shut on Monday.
Iran's Oil Minister Bijan Zanganeh on Thursday called on OPEC to reduce official production limits.
"We (OPEC) should consider cutting production to balance supply and demand in the market, especially in the second quarter," Zanganeh told reporters at an industry conference.
He said any reduction in supplies should be made from the group's official 24.5 million barrels per day (bpd) output ceiling. The 10 OPEC members bound by quotas are now pumping close to two million bpd above the official limits.
"There is an oversupply in the market, which if not controlled, will lead to a sharp price collapse in the long term," Zanganeh said.
Indonesian Mines and Energy Minister Purnomo Yusgiantoro said he would request that OPEC remove 1.5 million to two million bpd from the world market.
The International Energy Agncy, the energy watchdog for 26 industrialised nations, has urged OPEC to be cautious in any supply cut, saying that prices are still too high for firms to rebuild low stocks.
BUSH WANTS IRAQ U.N. SANCTIONS DROPPED
Oil demand usually dips in the second quarter after the winter heating spurt and before consumption of gasoline hits a peak during summer vacations.
The Organisation of the Petroleum Exporting Countries sharply ramped up production this year to cover supply disruptions from Venezuela, Nigeria and Iraq.
But officials now fear that prices, which fell 30 percent in one month, could come down further as demand drops off in the second quarter by about two million bpd.
Venezuelan and Nigerian output have largely recovered, while Iraqi crude exports could start to resume within a month, much earlier than expected if legal and administrative issues are ironed out at the United Nations.
U.S. President George W. Bush, who led the military campaign to oust Saddam Hussein, on Wednesday urged the United Nations to lift economic sanctions on Iraq.
But U.N. diplomats said an end to the embargo should depend upon the world body certifying that Iraq is free of nuclear, biological and chemical weapons, one of the reasons Washington gave for launching the war.
U.N. sanctions were slapped on Iraq after its invasion of neighbouring Kuwait in 1990. Its oil sales have been governed since 1996 by the U.N. monitored oil-for-food programme, which allows Baghdad to sell oil and use the proceeds to buy food, medicine and other civilian goods.
The U.S. military reckons it could get Iraqi oilfields pumping at two-thirds of pre-war levels within weeks, although resuming exports depends on creation of a political authority in the country.
Colonel Michael Morrow, adviser to U.S. forces chief Tommy Franks at Central Command in Qatar, said on Wednesday that output capability from Iraq's northern oilfields was expected to restart at 800,000 bpd in about four weeks.
Production from southern fields, where some sabotage took place, was expected to restart at 800,000 bpd in eight weeks.
Iraq was producing about 2.5 million bpd before the war.