'OPEC must ask Russia to join cartel if Iraq quits'

'OPEC must ask Russia to join cartel if Iraq quits'

A'an Suryana, The Jakarta Post, Jakarta

World oil prices could gradually fall to US$16 per barrel if
Iraq quit OPEC, as the market would anticipate an oversupply,
while the oil cartel would loose its ability to influence oil
prices, analysts said.

Oil analyst Kurtubi said over the weekend that to help
maintain OPEC's leverage in the market, the Organization of
Petroleum Exporting Countries should persuade Russia, a major oil
producing country, to join the group.

"Indonesia can start the campaign to persuade Russia to become
a full member of OPEC," he told The Jakarta Post.

Kurtubi explained that a sharp drop in oil prices would be
detrimental to the Indonesian economy as the state budget was
heavily funded by revenue from the commodity.

Iraq has some 112 billion barrels of oil reserves, second to
Saudi Arabia's 250 billion barrels.

Since the end of the U.S.-led war in Iraq, there has been
speculation that the country would leave OPEC for various
reasons.

First of all, Iraq would demand an oil production quota equal
to Iran's 3.49 million barrels of barrels per day (bpd) to help
boost revenue to help finance its reconstruction program. Many
members of OPEC would likely reject such a demand. This would
prompt Iraq to quit the cartel.

Prior to the war Iraq produced around 2.5 million bpd.

Another reason may come from the U.S., which is keen to see
oil prices fall to help revive the weak world economy.

"If Iraq really quit OPEC, oil prices could plunge to between
$16 to $18 per barrel," energy analyst Ramses Hutapea said.

Oil prices are currently hovering at around $25 per barrel,
still higher than the government's target of $22 per barrel for
this year, but lower than the more than $30 per barrel before the
start of the war two months ago.

OPEC's 11 members collectively supply 40 percent of the
world's oil output, and posses more than three-quarters of the
world's total proven crude oil reserves.

Founded in 1960 in Baghdad, Iraq, OPEC aims at coordinating
and unifying petroleum policies among member countries, in order
to secure stable prices for petroleum producers.

OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and
Venezuela.