OPEC members diverge on output cut

OPEC members diverge on output cut

Lachlan Carmichael, Agence France-Presse, Cairo

OPEC members expressed diverging opinions on Saturday on whether the oil cartel should automatically implement a production cut from April 1, despite soaring prices.

The United Arab Emirates (UAE) said the 11-member Organization of Petroleum Exporting Countries could delay a decision to reduce its official output ceiling, but Iran said the cut agreed in Algiers last month should go ahead.

"OPEC could revise its decision if there are new developments between now and the next meeting and if ministers feel it is necessary to revise this decision," UAE Oil Minister Obeid bin Saif al-Nassiri said.

Speaking in the UAE capital Abu Dhabi, he stressed that "a revision of the decision taken in Algiers will be in the implementation and not to cancel the decision."

OPEC decided on February 10 to cut its combined output ceiling of 24.5 million barrels per day by one million bpd from April 1. The cartel's next meeting is to be held on March 31 in Vienna.

But Iranian Oil Minister Bijan Namdar Zanganeh said Tehran had "committed" itself "to do the OPEC decision."

"We have announced to our customers that we are going to reduce (production) and we have decided to reduce their allocations," he told reporters here.

Zangeneh was attending a gas exporters' conference on Sunday, along with Nassiri and other OPEC oil ministers.

He insisted that the oil market was adequately supplied, and that the high prices were caused by factors "out of our control", hinting at political developments in cartel members Iraq and Venezuela.

"We believe that we have no shortage on the supply side of the market in the present month ... But some other things, out of our control, have happened in the market," said the Iranian minister, whose country is the second largest OPEC producer after Saudi Arabia.

Oil prices in New York prices enjoyed this week post-Iraq war highs of above US$37 per barrel.

The market fretted about a possible repeat of last year's oil stoppages in Venezuela, after mass protests against President Hugo Chavez, and the uncertainty surrounding a political transition plan in Iraq.

Zanganeh said OPEC has attempted to bring prices under control by producing more than its current official ceiling of 24.5 million bpd.

"We have unofficial overproduction in the market," he said, reiterating the cartel's target of maintaining the price of its reference basket of crudes between $22 and $28 a barrel.

"We think the price band is important," he said.

According to the Cyprus-based Middle East Economic Survey, OPEC production is currently about 26 million bpd, which means that the cartel is producing 1.5 million bpd above its official ceiling.

Zanganeh added that Iran wanted the cut in production to be implemented because it feared a price crash in the second quarter, when demand drops with the end of the winter season in the northern hemisphere.

"It's our main concern," he said.

OPEC president Purnomo Yusgiantoro, who is also Indonesia's energy minister, said on Thursday the cartel would allow members to raise output to stabilize prices.

"Leakage is allowed in the framework of assuring security of supply to the world market," Yusgiantoro said in Jakarta.

"We have a tolerance. They can increase their production in the framework of stabilizing prices," he said.