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.