Opec set to keep oil output unchanged

Times Online June 09, 2003 By Carl Mortished, International Business Editor

THE Opec oil producer cartel is unlikely to agree a production cut at its meeting in Doha this week despite rising anxiety over the imminent resumption of Iraqi oil exports.

Qatar’s Oil Minister said yesterday that there was no immediate plan to reduce the flow of crude. “We won’t just cut for the sake of cutting,” he said. However, he indicated that potential Iraqi output would be on the agenda at Wednesday’s Opec meeting.

The Opec leaders are taking comfort from a buoyant oil price which rose above $31 in New York on Friday. The oil ministers of Saudi Arabia and Venezuela met with their non-Opec Mexican counterpart in Madrid last week in the hope of garnering support for cutbacks when Iraq returns to the market. Rafael Ramirez, the Venezuelan oil minister, said: “We are also in contact with Russia and Norway and I think we will get good results.”

The Opec leaders’ plans are being confounded by the continuing high price of oil despite fundamental weaknesses in the market. Leo Drollas, of the Centre for Global Energy Studies, said: “It is a tale of two halves. The western hemisphere is tight while the east is getting weaker.”

The US is still short of petrol and crude stocks have still not fully recovered from the shortages caused by the Venezuelan oil strike last winter. In Asia the picture is quite different, with refiners in Singapore cutting their output in response to weak demand.

Iraq hopes to begin normal crude exports by the end of the month but a substantial contribution to global production is probably months away.