The OPEC oil cartel is unlikely to increase production at a meeting next week, the cartel's head said Friday, June 29, arguing that world crude supply remained ample despite Iraq's suspension of exports.
The 11-member cartel, which produces 40 percent of the world's oil, will notably quiz their Iraqi counterpart over Baghdad's plans for resuming its exports, OPEC Secretary General Ali Rodriguez told AFP.
"It seems that in this meeting OPEC will not take any decision to increase production," he said ahead of next week's meeting.
The Organization of Petroleum Exporting Countries (OPEC) called next Tuesday's extraordinary meeting last month to decide what to do in the light of market reaction to Iraq's suspension of oil exports.
But fears that the Iraqi cut, decided in a row over proposed changes to a UN-administered oil-for-food program, could send prices soaring have proved unfounded.
Crude prices have even slipped in recent days.
"We have seen today that prices are falling, basket prices that demonstrations that the market is in balance (and) that supplies are more than satisfactory in the market," said Rodriguez.
Traders say the market has already factored in a "no change" decision at OPEC's meeting.
The only wildcard is Iraq, which will also be in focus on Tuesday as the UN Security Council's deadline for agreement on US-backed proposals to modify the sanctions regime against Baghdad is due to expire.
"The reason that they are having this meeting is to be able to make a decision if Iraqi output remains off the market and we won't know until much closer to the time whether it will remain off," said GNI commodities expert Lawrence Eagles in London.
If US-British efforts to impose new so-called smart sanctions fail, the likely alternative would be an extention of the existing UN oil-for-food deal, a move that would be welcomed by Iraq and could see Baghdad turning the taps back on.
"If Iraq does come back that means there's going to be another two million barrels of oil which OPEC would rather we didn't have at the moment so I am sure there are going to be some members who are going to be talking about a cut," Eagles said.
Rodriguez admitted that the Iraqi export suspension was having a short term impact on markets. "The situation of Iraq has some impact because they are waiting to restart exports. This expectation puts some pressure at this time."
And he said Iraqi Oil Minister Amer Rasheed would face close questioning from his counterparts next week.
"We are going to discuss this possibility with the Iraqi minister in the conference. Of course if Iraq adds one or two million in the market that will have an impact on the price," he said.
OPEC President Chakib Khelil also appeared to rule out an increase in oil production earlier this week.
"Obviously, in the short term, there is uncertainty surrounding the Iraqi crude, but for the time being OPEC has no worries and there is no reason to increase production," he said Tuesday.
The Venezuelan secretary general declined to rule anything out at Tuesday's meeting. "There remains a possibility. All the ministers have to have their say," he said.
Pressed on whether there was a need for more oil in the market, he replied: "There is not at this moment a necessity for more oil, but perhaps in the third and fourth quarter."
Rodriguez played down a forecast by OPEC member Kuwait that the cartel will not change production this year. "I do not know for the rest of the year, but not for the time being," he said. — (AFP)
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