OPEC KEEPS OUTPUT AT PRESENT LEVEL
OSAKA, (Japan) 19 Sept. (IPS) As expected, the Organisation of Oil Producing Countries (OPEC) decided on Thursday to maintain its global production at the present level, estimating that at the present level, oil prices are not harming Western industries.
The Organisation of the Petroleum Exporting Countries left supply limits on hold despite worries among consumer nations about the impact of high energy costs on the world economy.
"Prices are OK for producers and consumers", said Saudi Arabia Oil Minister Ali al-Na’imi. "This is not a decision we took lightly. We had to take account of many uncertainties including Iraq", he pointed out.
However, experts said OPEC cutbacks, in place since January, have combined with the threat of a US war against Iraq to push benchmark US crude close to US$30 a barrel.
Producers will meet again on December 12 to review policy for the first quarter of next year, by which time any US plans for military action may be clearer.
OPEC’S Nigerian President Rilwanu Lukman said the price in the marketplace is inflated by the threat of war in the Middle East. "There are enough oil on the market right now. We have to see how events develops in the coming days", he told journalists in Osaka.
The 11 members Organisation is producing 21.7 millions barrel per day (bpd).
Sheykh Ahmad Fahd Ahmad al Sabah, Kuwait’s Oil minister confirmed that point, and said OPEC is ready to hel the market’s security.
"All members have reached the conclusion that the present level (of OPEC output) should be maintained, as there are no need and reason for bringing more oil on the market", the Minister said, assuring that in case prices goes further up, the Organisation would respond positively.
Thursday's OPEC decision kept the heat on oil prices, US crude edging higher by 18c to $29.66 a barrel in electronic trade by 10:00. That values a basket of cartel crudes about a dollar short of the top of the group's $22-$28 target range.
An existing OPEC "automatic formula" helps the Organisation increase or decrease its global output by half a million barrels a day if prices slip under 22 or mount above 28 US Dollars for a period of six months.
With fuel demand rising ahead of the northern hemisphere winter and the United States pressing the case against Iraq, fuel bills may quickly come under further upward pressure.
However, Iraq’s decision to authorise United Nations arms inspectors to come back to Baghdad and continue their work without conditions has eased oil markets tensions of the past days.
According to Mr. Mehdi Varzi, an international Iranian oil expert based in London, up to six dollars of the present prices are due to the fear from an eventual American attack on Iraq, having nothing with the demand and offer principle.
"The fear of seeing Iraq increases its exports is another source of worries for the OPEC producers", he said, regretting that the Organisations reacts on day by day basis instead of drawing a middle or long term strategies.
Prices eased a little after Baghdad said it would allow United Nations weapons inspectors unconditional access.
The so-called "war premium" is believed to have inflated oil by $2 to $4 per barrel, but some in OPEC noted that prices slid earlier in the week when Iraq said it would readmit U.N. weapons inspectors. Prices have since crept back up as it became clear OPEC would probably not boost output for now.
In an interview on CNN, Lukman said OPEC won't even try to stop the cheaters for now, because that would nudge up prices and stir more tensions with consumers who fear oil at around $30 per barrel will harm their chances for an economic recovery.
"Excess production over the official quota is always a concern for everybody", Lukman said. "If we are to pull this 1.9 to 2 million barrels out of the market, the prices will shoot up".
The Organisation's experts admit leakage in August was 2 million barrels daily above official limits of 21.7 million bpd for 10 member countries.
Members of the Organization of the Petroleum Exporting Countries are Algeria, Indonesia, Iran, Iraq, Libya, Kuwait, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. ENDS OPEC JAPAN MEETING 19902