onebusiness.nzoom.com Opec Secretary General Alvaro Silva said on Wednesday that the cartel could consider output cuts to keep oil prices within its preferred price range of $US22 to $US28 per barrel.

"If we need to cut to keep the prices within the band, we will consider doing that," Silva told reporters at an event at the Central University of Venezuela in Caracas.

Opec is scheduled to meet on June 11 in Qatar to decide on production policy. Opec has also invited rival exporters - Russia, Norway, Mexico, Oman, Angola, Egypt and Syria - to its conference in Doha.

Oil prices dipped from recent five-week highs Wednesday as traders eyed the return of Iraq's exports after the US-led war on Baghdad.

US crude futures settled 77 cents lower at $US28.58 a barrel on Wednesday after Iraqi oil officials said exports could be restarted in two to three weeks.

Opec agreed in April to cut oil production by 2 million bpd beginning June 1, after several cartel members earlier in the year increased output ahead of the invasion of Iraq.

"If these measures are not sufficient, it is possible we will take additional measures to keep the market balanced," Silva said.

Venezuelan Oil Minister Rafael Ramirez on Wednesday said the cartel could reduce its production ceiling by up to 1 million bpd if Opec decides to reduce quotas in June.

Iraq's de facto oil minister, Thamir Ghadhban, said over the weekend he expected Iraq to pump 1.4 million bpd, about half of prewar capacity, by mid-June.

Tue May 27, 2003 12:50 PM ET By Sujata Rao

LONDON (<a href=reuters.com>Reuters) - World oil prices fell back on Tuesday as traders took profits from recent gains but players said underlying sentiment remained bullish in an environment of low global energy stocks.

London benchmark Brent fell 44 cents to $25.80 a barrel, retreating from highs of $26.71 a barrel hit earlier in the day, when prices reacted to reports that Saudi Arabia was preparing to trim June supplies.

U.S. light crude fell 54 cents to $28.62 a barrel after a strong start and traders said more fresh news would be needed to propel the price any higher. Some of the weakness was due to profit-taking on gasoline.

But analysts said the market remained worried about lower OPEC supply at a time oil stocks in the U.S., the world's biggest oil consumer, are far below average for this time of the year.

"Markets will be wary of moving much lower seeing that stocks are so low," Middleton said.

The inventories have come into sharp focus as the Memorial day holiday last weekend marks the start of the U.S. driving season when Americans take to the roads on vacation.

U.S. gasoline consumption in the summer accounts for 12 percent of global energy demand during the period and gasoline inventories are some four percent under year-ago levels.

Analysts said expectations had not materialized of large crude shipments to the United States after the OPEC cartel hiked output in March to compensate for the loss of Iraqi barrels as well as some Nigerian outages.

"There were all these expectations of a wall of crude which was supposed to arrive and resolve all the stock problems but that didn't seem to happen," said John Waterlow, analyst with Wood Mackenzie in Edinburgh.

OPEC

Crude prices have rebounded by more than 10 percent since the start of May, as U.S. energy stocks have failed to return to normal after a harsh winter.

Now concern is mounting that OPEC is preparing to trim supplies. A Gulf source told Reuters on Monday that Saudi Arabia was preparing to cut June supplies to match the output quotas agreed on last month. It is expected to cut output to 8.25 million barrels per day (bpd) in June.

Consultancy Petrologistics said Saudi Arabia pumped 9.1 million bpd in May with overall OPEC output at 26.7 million bpd.

Adding to the worry is that Venezuela, a key gasoline source for the U.S., says it will further delay exports of reformulated clean burning gasoline that is mandatory in many U.S. states.

One bearish factor however is that Iraq is gearing up for its first oil exports since the war, aiming to first sell some eight million barrels lying in storage at Turkey's Ceyhan port.

The head of Iraq's state oil marketer SOMO, Mohammed al-Jibouri, told Reuters on Tuesday Baghdad aims to export the first post-war barrels of crude by mid-June. He said steady exports should follow as output from oilfields is rising fast.

Before the war, Iraq supplied four percent of globally traded oil and analysts say a resumption of Iraqi exports is likely to trigger a price slide in the third quarter of 2003.

Monday, May 26, 2003
(05-26) 12:47 PDT CARACAS, Venezuela (<a href=www.sfgate.com>AP) --

Venezuela would reduce its oil production if the Organization of Petroleum Exporting Countries decided to slash quotas at its meeting next month, the president of the state oil monopoly said Monday.

"Venezuela will comply with whatever OPEC members decide in June," Ali Rodriguez told a news conference.

Venezuelan officials had previously indicated the country would continue producing more than 3 million barrels a day this year to recover losses stemming from a two-month strike, raising doubts about the South American country's commitment to OPEC quotas.

Venezuela's OPEC current quota is 2.81 million barrels a day but will rise to 2.92 million barrels a day in June. Rodriguez said Venezuela's production was 3.3 million barrels a day. But industry sources say it's much lower.

Venezuela lost an estimated $6 billion during the opposition-organized general strike, which collapsed in February without achieving its goal of ousting President Hugo Chavez. The stoppage temporarily paralyzed the world's No. 5 oil producer.

OPEC countries agreed in April to reduce oil output by 2 million barrels a day, setting a ceiling of 25.4 million barrels a day effective June 1.

The target was up 900,000 barrels a day from the previous one, but to meet it OPEC had to cut actual production by 2 million barrels a day.

OPEC could set new quotas at its June 11 in Doha, Qatar.

By Jeffrey Sparshott THE WASHINGTON TIMES

    Price stability in crude-oil markets will remain the priority for Saudi Arabia and other major producing nations as Iraq resumes output and considers its future in OPEC.

    "A steady price within a certain range: That's the biggest concern we have," said Nail Al-Jubeir, spokesman for the Saudi Arabian Embassy in Washington.

    The chief U.S. adviser to Iraq's Oil Ministry this weekend said that withdrawal from the Organization of the Petroleum Exporting Countries might be in Iraq's best interest as the country looks to increase production.

    Oil-cartel quotas might prevent Iraq from selling enough oil to meet reconstruction-revenue needs, said Philip J. Carroll, the U.S. adviser who oversees reconstruction of Iraq's oil industry.

    Iraq has the world's second-largest proven oil reserves, second only to Saudi Arabia.

    "It is going to take some time to adjust if Iraq goes out [of OPEC], but it will not affect the overall issue," Mr. Al-Jubeir said.

    Saudi Arabia is by far the oil cartel's biggest producer. In April, the Middle Eastern kingdom produced 9.6 million barrels per day, the highest level since the OPEC quota system was instituted in 1982, according to the U.S. Energy Information Administration.

    Iran was a distant second in OPEC production at 3.75 million barrels.

    Higher OPEC production offset losses from the war in Iraq as well as political turmoil in Nigeria and Venezuela — all members of the 11-nation oil cartel.

    Since then, OPEC leaders have called for lower production to maintain prices in a $22 to $28 per-barrel range. At a meeting last month, members agreed to reduce production by 2 million barrels a day to 25.4 million, effective June 1.

    Crude closed at $28.83 per barrel on the New York Mercantile Exchange yesterday, down from $29.14 Friday. OPEC price targets are based on an average of crude-oil-pricing data from several countries, and the OPEC calculation is generally lower than public trading figures.

    Iraq, one of the organization's founding members, has not been a factor in OPEC production quotas because of U.N. restrictions and because, since the war started in March, the country's oil exports have essentially stopped.

    Analysts say it will take time for Iraq to have a government capable of deciding on OPEC membership and, regardless, the country is more than a year away from making a dent in OPEC's quota.

    Oil production has resumed, but Iraqi fields are pumping only 310,000 barrels daily.

    "I don't see Iraq pulling out [of OPEC] any time soon," said Robert E. Ebel, director of the Center for Strategic and International Studies energy program.

    "I think they would consider [leaving] only when they believe continuing membership would constrain growth ... . That's not likely to come until later this decade," he said.

    Iraq is about 1½ years from reaching 3.5 million barrels per day of oil production, Mr. Ebel estimated.

    Iraqi exports are likely to reach 1.5 million barrels per day during the third quarter, the Energy Information Administration estimated.

    Under a U.N. oil-for-food program, Iraq was selling roughly 2 million barrels of oil per day in the months before the U.S.-led invasion.

    Output in 1990 was about 3.5 million barrels per day, but oil fields have been damaged by war, neglect and looting.

    More likely than a withdrawal from OPEC would be a temporary suspension from participation, said James Dobbins, director for international security at the Rand Corp., a policy think tank.

    "Iraq is not going to have a government capable of making a decision like that for a year or two," he said of leaving the organization.

    OPEC also is trying to coordinate with major oil producers outside of the cartel.

    The group invited Russia, Norway, Mexico and four other producers to its next meeting, June 11, in Doha, Qatar.

    OPEC members are Venezuela, Algeria, Libya, Nigeria, Saudi Arabia, Kuwait, Iraq, Iran, United Arab Emirates, Qatar and Indonesia.

Reuters, 05.19.03, 2:48 PM ET

CARACAS, Venezuela (Reuters) - OPEC Secretary General Alvaro Silva said Monday he was satisfied with current oil prices and that the oil cartel was preparing to cut output in June in line with new quotas approved last month.

"Today we can say that the market has recuperated and is showing stable levels", Silva was quoted as telling Venezuela's official state news agency Venpres, adding prices were now in "good health".

The value of OPEC's basket of crude on Monday was around $26.24, within the cartel's preferred price band of $22 to $28 a barrel, after dipping as low as $23 a barrel after the war in Iraq, the ex-Venezuelan oil minister said.

The oil cartel is also preparing to implement production quotas -- agreed by OPEC in late April and which will take effect on June 1 -- aimed at wiping out a perceived two million barrel bpd oversupply in global crude markets, Silva said.

Oil prices spiked near $40 a barrel earlier this year ahead of the U.S. war in Iraq and following a crippling oil strike in Venezuela during December and January that temporarily shut down the OPEC nation's crude and product exports.

But prices have fallen nearly 30 percent in the last two months as Iraq's oil facilities escaped heavy damage from the war and OPEC raised output to compensate for the loss of Iraqi oil exports.

Silva said Venezuela's oil production had recovered from the oil strike, started Dec. 2 by foes of President Hugo Chavez, and that South American nation was pumping up to its OPEC quota.

Venezuela has an official OPEC ceiling of 2.923 million barrels per day (bpd), but government officials say production is closer to 3.1 million bpd.