OPEC to Keep Current Production Levels-- OPEC Ministers Decide to Maintain Current Production Levels at Least Until End of July
The Associated Press DOHA, Qatar June 11 —
OPEC ministers decided Wednesday to maintain current production levels at least until the end of July, the president of the oil cartel said.
Abdullah bin Hamad al-Attiyah told reporters initially the 11-nation cartel would preserve its output level until its next scheduled meeting in September. But he later said the Organization of Petroleum Exporting Countries would hold an extraordinary meeting on July 31 to reassess the situation.
"Then we will have some options either to cut production or not. That is what we need to decide," al-Attiyah said.
Al-Attiyah, who is also the oil minister of Qatar, said the July meeting would look at the impact of Iraq's return to the oil market.
Oil prices initially moved slightly lower in the wake of the announcement, but were trading higher for the day by early afternoon in New York.
Before the decision was made, Iranian Oil Minister Bijan Namdar Zanganeh said he expected OPEC to maintain current output "for two to three months." Venezuelan Deputy Oil Minister Luis Vierma said he thought OPEC might be able to keep present the production ceiling of 25.4 million barrels a day until the end of the year.
The OPEC ministers also pleaded for greater self-discipline, urging member states to stop exceeding production quotas.
"The conference decided to maintain currently agreed production levels with stricter compliance of designated quotas," OPEC spokesman Omar Farouk Ibrahim told reporters.
Attracted by high prices, member states have been exceeding their designated quotas and have oversupplied the market by about 1.5 million barrels a day.
The oil minister of the United Arab Emirates, Obaid bin Saif al-Nasseri, called for members to respect their quotas.
"The market is comfortable, but we should think ahead to the third quarter," which begins July 1, al-Nasseri said Tuesday.
He estimated overproduction by the 10 OPEC nations, excluding Iraq, at 1.5 million barrels a day. That means the group is pumping 26.9 million barrels a day onto the market.
"We should look into reducing actual production of member states" rather than adjust the ceiling, al-Nasseri said.
"OPEC must be very careful in handling Iraqi's return," Iranian oil minister Bijan Namdar Zanganeh told reporters earlier Wednesday.
Iraq, which was excluded from OPEC's quota schedule during the 12 years of U.N. sanctions, says it hopes to export 1 million barrels a day by the end of June and 2 million barrels a day by the end of the year.
Analysts say that is too optimistic in view of the state of Iraq's oil industry, which suffered war damage, postwar looting, a chronic shortage of spare parts during the sanctions period. Before the war began in March, Iraq pumped around 2.5 million barrels a day.
Members of the 11-nation cartel differed over when Iraq was expected to resume oil exports, and when the OPEC would need to curb production in order to accommodate Iraqi supplies.
"The pace and the extent of the return of Iraqi crude to the market remain unclear," OPEC President Abdullah bin Hamad al-Attiyah said in his opening speech to Wednesday's meeting, at which Iraq was not represented.
Kuwait's acting oil minister, Sheik Ahmad Fahd al-Ahmad, said Iraq needed until September to raise its production to 2 million barrels a day, and that OPEC production could remain unchanged until then.
"From now until September, Iraq will need (to do) a lot to reach the level of production," Sheik Ahmad said. "For that, we still have time to continue our ceiling."
OPEC's al-Attiyah foresees Iraq pumping 1 million barrels a day of oil by the third quarter. He has urged producers to take steps to avoid a glut and price crash.
An OPEC meeting before the scheduled one in September had been seen as necessary to discuss not only Iraq's return but also the high level of oil prices. Prices have hovered around the upper limit of OPEC price band of $22 to $28 a barrel.
OPEC's basket of seven crude oils averaged $27.53 a barrel on Monday. Oil prices hit a three-month high in New York, nearly reaching $32 a barrel.
On Wednesday, July contracts of light sweet crude were up 62 cents at $32.35 a barrel in afternoon dealings in New York. In London, North Sea Brent for July rose 32 cents to $28.40.
If OPEC members do manage to comply with their quotas, an American national industry report has predicted that U.S. consumers may have to pay more per gallon as demand increases during the summer vacation months.
"Gasoline prices are already rising in some parts of the country on a spotty basis," the Lundberg Survey of 8,000 stations reported Sunday. "Considering the latest crude oil developments, it's likely gasoline prices are turning round and will soon rise."
Non-OPEC producers are also concerned about the impact of Iraqi oil when it comes on stream. Russia and Mexico sent delegates to the Wednesday meeting.