June 9 (<a href=quote.bloomberg.com>Bloomberg) -- The Organization of Petroleum Exporting Countries, supplier of a third of the world's oil, will probably defer output cuts until later this year because prices are rising and Iraqi exports are delayed, officials and analysts said.

The group meets Wednesday in Doha, Qatar, to consider a response to the impending return of sales from Iraq, which pumped 3 percent of world supply before the war. Exports stopped when U.S. and British forces invaded on March 20, and looting since then has hampered efforts to restore production.

OPEC doesn't see any need to change the quota'' for now, said Leo Drollas, deputy executive director at the London-based Centre for Global Energy Studies, a consulting company founded by former Saudi oil minister Sheikh Zaki Yamani. Prices are too high. They will need a cut sometime in the summer.''

Crude oil has risen by more than a fifth in New York since April to around $31 a barrel, because of a drop in inventories and an April 24 accord by OPEC to lower output as of this month. A cut in quotas in Doha is unlikely, Qatari Oil Minister Abdullah bin Hamad al-Attiyah and Indonesian Oil Minister Purnomo Yusgiantoro said last week.

Crude oil for July delivery slid 36 cents to $30.92 a barrel in after-hours electronic trading on the New York Mercantile Exchange, as of 11:40 a.m. in London.

Oil prices are at an acceptable level, said OPEC Secretary- General Alvaro Silva in an interview last week at OPEC's headquarters in Vienna, signaling he also favors no change in output. The 10 OPEC members outside of Iraq restrain production to keep their price index between $22 and $28 a barrel. The index was at $26.77 on Thursday and has averaged $25.41 a barrel for the last three years.

Waiting

This is a meeting to monitor the market,'' Silva told reporters in Doha today. After our decision in April to cut from the first of June, we have to know the result'' before taking further steps.

The meeting in Qatar, current holder of the OPEC presidency, is OPEC's fourth in 2003. Ministers later this year will have to decide when to reduce output to make room for Iraq, which pumped 2.5 million barrels a day before the war, analysts said.

``The main issue is going to be how we're going to insert Iraq,'' Venezuelan Deputy Oil Minister Luis Vierma said in an interview in Vienna last week. Eventually, OPEC will have to cut production, he said.

In a prelude to Wednesday's meeting, the oil ministers from Saudi Arabia, Venezuela and non-OPEC Mexico met in Madrid on Friday to discuss the market. They took no action to limit oil output, saying supply and demand are in balance.

The three nations, which are usually among the top four suppliers to the U.S., have consulted on oil policy since 1998.

The market is receiving all the supply it needs,'' Juan Antonio Barges, Mexico's deputy oil minister, said in a telephone interview in Doha. The market is not calling for cuts.''

Four other independent oil-producing countries -- Russia, Angola, Syria and Oman -- accepted OPEC's invitation to send representatives to the Doha meeting. Iraq, under control of the U.S.-led coalition, wasn't asked to attend.

Officials from Algeria and Kuwait have left open the chance of a cut in quotas on Wednesday. OPEC should consider such a move because a slowing world economy may prevent demand from keeping pace with supply as Iraqi output recovers, analysts said.

`Fine Tuning'

Forecasters have cut estimates for oil demand as severe acute respiratory syndrome reduces travel and slows growth in Asia. The International Monetary Fund expects the world economy to expand by 3.2 percent this year, hindered by concern over war and terrorism. It predicted 3.7 percent growth in September.

OPEC needs to cut, but they might not do that just now,'' said Tor Kartevold, an analyst at Statoil ASA, Norway's biggest oil company. It's a question of fine tuning for OPEC, which is always very difficult'' given the situation in Iraq.

Iraqi shipments through a pipeline to the port of Ceyhan, Turkey, may not start for two more months because equipment for operating the route was stolen, Adel Kazaz, director-general of Iraq's North Oil Co., said last week in Kirkuk, Iraq.

The oil fields around Kirkuk accounted for half the country's exports. The pipeline closure to Ceyhan will leave Iraq dependent on shipments from the Rumaila fields in the south, where erratic power supplies and the loss of a pumping station have hampered operations.

Iraq

OPEC needs to know what Iraq is producing and exporting,'' said Adam Sieminski, an oil strategist at Deutsche Bank AG. Unfortunately, even the Iraqis don't seem to know that.''

Iraq is pumping 700,000 barrels a day, according to the nation's oil ministry. U.S. Vice President Richard Cheney has said output should reach prewar levels, or even 3 million barrels a day, this year.

While rising supply from Iraq may threaten OPEC's control of prices in coming years, industry executives expect the group to accommodate Iraq without a collapse in prices for now.

``We will see reasonable strength through the end of the year,'' said Paul Skinner, head of Royal Dutch/Shell Group's oil- refining unit, at a conference in London last week.

``OPEC has done a good job in the last three to four years in flexible management of the supply side of the market. I would expect that they would continue to demonstrate that flexibility.''

NZOOM

Opec this week is set to press independent exporters to back the cartel's next supply cut to prevent the resumption of Iraqi exports undercutting oil prices.

Opec President Abdullah al-Attiyah made clear that major non-aligned producers Mexico, Russia and Norway would be called on to help the Organisation of the Petroleum Exporting Countries defend its $US25 a barrel price target.

"Yes. We require their support... I feel we have their support," Attiyah, also oil minister of Qatar, told reporters in Doha ahead of Wednesday's meeting.

With oil prices at the top end of the group's $US22-$US28 preferred price range, some ministers have said there appears no need for any immediate cut from its 25.4 million barrel a day output limit.

But the cartel is preparing the ground for possible restraints later this year by putting early pressure on its rivals to prevent them winning market share.

It may need to meet again to consider output policy before its next scheduled late-September conference.

Opec powers Saudi Arabia and Venezuela met with Mexico in Madrid on Friday to discuss the reemergence of Iraq on the world market and Venezuelan Oil Minister Rafael Ramirez travels to Norway on Monday.

Recovering from the US-led war, Baghdad is preparing to resume international sales in about a week's time. Shipments are expected to stay well below pre-war levels for several months.

With US crude now over $US31 a barrel, alarm bells are ringing in Washington as summer gasoline demand puts upward pressure on import prices.

"We won't just cut for the sake of cutting," Attiyah said.

"I don't want to see my consumers angry, I believe the customer is always right but we have to be careful about the balance between demand and supply."

Opec has not needed to reduce production limits since late 2001, when it slashed supplies on condition that independent producers contribute. They resisted until prices slumped and then fell into line.

Russia, Mexico, Syria, Oman, Egypt and Angola among non-Opec will be represented officially in Doha, for the first time at an extraordinary Opec meeting.

The main subject of oil market debate, Iraq, will not send a delegation, an issue which has rankled Iraqi officials.

Attiyah acknowledged there had been no contact between Opec headquarters and Iraq since the US occupation, but urged Iraqis at Baghdad's interim authority to get in touch.

"I did not receive any request from Iraq, but personally I'd be happy to talk to them," he said, adding he hoped Baghdad would be able to attend Opec's next scheduled meeting in September.

(<a href=www.msnbc.com>Reuters) DOHA, Qatar, June 8 — OPEC this week is set to press independent exporters to back the cartel’s next supply cut to prevent the resumption of Iraqi exports undercutting oil prices.     OPEC PRESIDENT Abdullah al-Attiyah made clear on Sunday that major non-aligned producers Mexico, Russia and Norway would be called on to help the Organization of the Petroleum Exporting Countries defend its $25 a barrel price target.        “Yes. We require their support ... I feel we have their support,” Attiyah, also oil minister of Qatar, told reporters in Doha ahead of Wednesday’s meeting.        With oil prices at the top end of the group’s $22-$28 preferred price range, some ministers have said there appears no need for any immediate cut from its 25.4 million barrel a day output limit.        But the cartel is preparing the ground for possible restraints later this year by putting early pressure on its rivals to prevent them winning market share.        It may need to meet again to consider output policy before its next scheduled late-September conference.        OPEC powers Saudi Arabia and Venezuela met with Mexico in Madrid on Friday to discuss the reemergence of Iraq on the world market and Venezuelan Oil Minister Rafael Ramirez travels to Norway on Monday.      Recovering from the U.S.-led war, Baghdad is preparing to resume international sales in about a week’s time. Shipments are expected to stay well below pre-war levels for several months.        With U.S. crude now over $31 a barrel, alarm bells are ringing in Washington as summer gasoline demand puts upward pressure on import prices.        “We won’t just cut for the sake of cutting,” Attiyah said.        “I don’t want to see my consumers angry, I believe the customer is always right but we have to be careful about the balance between demand and supply.”        OPEC has not needed to reduce production limits since late 2001, when it slashed supplies on condition that independent producers contribute. They resisted until prices slumped and then fell into line.        Russia, Mexico, Syria, Oman, Egypt and Angola among non-OPEC will be represented officially in Doha, for the first time at an extraordinary OPEC meeting.        The main subject of oil market debate, Iraq, will not send a delegation, an issue which has rankled Iraqi officials.        Attiyah acknowledged there had been no contact between OPEC headquarters and Iraq since the U.S. occupation, but urged Iraqis at Baghdad’s interim authority to get in touch.        “I did not receive any request from Iraq, but personally I’d be happy to talk to them,” he said, adding he hoped Baghdad would be able to attend OPEC’s next scheduled meeting in September.

<a href=www.timesofoman.com>Times of Oman

RIYADH — Iraq’s return to the oil market is not expected to alter Opec’s short-term policies on output and price, but the producers’ cartel, which meets in the Gulf this week, should be ready for “painful” decisions in coming years, economists warned yesterday.

Oil ministers of the Organisation of Petroleum Exporting Countries will discuss at their June 11 meeting in Doha, Qatar, the main issue of reallocating output quotas once Iraq increases exports to effective levels.

“Opec will not cut its output levels now, because the price is high. They will mostly focus on discussing quota levels when Iraq returns,” Abdulwahab Abu-Dahesh, senior economist at Riyad Bank, said.

“Iraq is not expected to return to its pre-1990 export levels before a couple of years ... A number of technical problems must be overcome. That too requires huge investments,” Abu-Dahesh said.

Oil prices inched upwards on Friday as the energy ministers of Saudi Arabia, Venezuela and Mexico met in Madrid and pledged to cooperate with other producers in ensuring a fair price for the crude to stabilise the world market.

The price of benchmark Brent North Sea crude oil for July delivery rose 34 cents to $27.78 per barrel.

New York’s light sweet crude July contract was up 31 cents to $31.05 in early trading.

The three countries stressed the need to “continue monitoring developments in the market during the coming few months in a bid to avoid factors that may destabilise it.”

The Opec meeting on June 11 will assess the state of the oil market, especially in light of the expected resumption of Iraqi production and the return of Venezuela and Nigeria to their normal production levels.

Regular Iraqi oil exports are not expected to restart until early July at the earliest, and the volume of such exports is unknown due to widespread looting and telecommunications problems.

The acting head of Iraq’s Oil Ministry, Thamir Ghadhban, said last month that he expected output to reach 1.5 million barrels per day (bpd) by the end of June and three million bpd by the end of the year.

But oil expert Abdullah bin Ali Ibrahim, of the Dammam-based Arab Petroleum Investments Corp., believes no major change will happen before one to two years.

“In the short-term of one to two years, nothing significant will happen. But in the mid-term, changes are bound to take place. Everything depends on Iraq’s volumes of production and export ... and size of investments,” Ibrahim said.

The future of production quotas and protection of Opec’s $22-28 price band appears to increasingly depend on Iraq’s decision to continue membership with the 11-member cartel or to opt out.

Baghdad has not been subject to a quota since July 1990 when output was set at 3.14 million bpd, the same as Iran and about 14 per cent of Opec’s production ceiling.

“The possibility of Iraq’s not returning to Opec is very remote. It is in Iraq’s interest to remain in the cartel because that would give it a privileged status to produce more and it can help maintain fair prices,” Abu-Dahesh said.

“Iraq needs long term finance for reconstruction and thus wants to see fair oil prices continue. I believe Baghdad has no option but to remain within Opec. This also applies to US oil firms expected to invest in Iraq,” he said. Iraq has not been invited to attend the Doha meeting because the occupation authorities have not yet installed a national government in Baghdad.

But Ibrahim believes that if Iraq is to remain with Opec, cartel members, especially Saudi Arabia, are required to take painful decisions by cutting their output quotas. — AFP

Sun June 8, 2003 11:47 AM ET By Richard Mably and Jonathan Leff

DOHA, Qatar (<a href=reuters.com>Reuters) - OPEC this week is set to pressure independent exporters to back the cartel's next supply cut to prevent the resumption of Iraqi exports undercutting oil prices. OPEC President Abdullah al-Attiyah made clear Sunday that major non-aligned producers Mexico, Russia and Norway would be called on to help the Organization of the Petroleum Exporting Countries defend its $25 a barrel price target.

"Yes. We require their support ... I feel we have their support," Attiyah, also oil minister of Qatar, told reporters in Doha ahead of Wednesday's meeting.

With oil prices at the top end of the group's $22-$28 preferred price range, ministers have said there is no need for any immediate cut from its 25.4 million barrel a day output limit.

But the cartel is preparing the ground should it need to reduce supply later this year by making sure non-OPEC countries are aware it requires their cooperation.

OPEC powers Saudi Arabia and Venezuela met with Mexico in Madrid Friday to discuss the reemergence of Iraq on the world market and Venezuelan Oil Minister Rafael Ramirez travels to Norway Monday.

Recovering from the U.S.-led war, Baghdad is preparing to resume international sales in about a week's time, but shipments are expected to stay well below pre-war levels for several months.

With U.S. crude now over $30 a barrel, alarm bells are ringing in Washington as summer gasoline demand puts upward pressure on import prices.

"We won't just cut for the sake of cutting," Attiyah said.

"I don't want to see my consumers angry, I believe the customer is always right but we have to be careful about the balance between demand and supply."

OPEC has not needed to reduce production limits since late 2001, when it slashed supplies on condition that independent producers contribute. They resisted until prices slumped and then fell into line.

Russia, Mexico, Syria, Oman, Egypt and Angola among non-OPEC will be represented officially in Doha, for the first time at an extraordinary OPEC meeting.

The main subject of oil market debate, Iraq, will not send a delegation, an issue which has rankled Iraqi officials.

Attiyah acknowledged there had been no contact between OPEC headquarters and Baghdad since the U.S. occupation, but urged Iraq to get in touch.

"I did not receive any request from Iraq, but personally I'd be happy to talk to them," he said, adding he hoped Baghdad would make OPEC's next scheduled meeting in September.