OPEC to ask rivals to back oil cut

OPEC to ask rivals to back oil cut

Reuters, Doha

OPEC this week is set to press independent exporters to back
the cartel's next supply cut to prevent the resumption of Iraqi
exports undercutting oil prices.

OPEC President Abdullah al-Attiyah made clear on Sunday that
major non-aligned producers Mexico, Russia and Norway would be
called on to help the Organization of the Petroleum Exporting
Countries (OPEC) defend its US$25 a barrel price target.

"Yes. We require their support ... I feel we have their
support," Attiyah, also oil minister of Qatar, told reporters in
Doha ahead of Wednesday's meeting.

With oil prices at the top end of the group's $22-$28
preferred price range, some ministers have said there appears no
need for any immediate cut from its 25.4 million barrel a day
output limit.

But the cartel is preparing the ground for possible restraints
later this year by putting early pressure on its rivals to
prevent them winning market share.

It may need to meet again to consider output policy before its
next scheduled late-September conference.

OPEC powers Saudi Arabia and Venezuela met with Mexico in
Madrid on Friday to discuss the reemergence of Iraq on the world
market and Venezuelan Oil Minister Rafael Ramirez travels to
Norway on Monday.

Recovering from the U.S.-led war, Baghdad is preparing to
resume international sales in about a week's time. Shipments are
expected to stay well below pre-war levels for several months.

With U.S. crude now over $31 a barrel, alarm bells are ringing
in Washington as summer gasoline demand puts upward pressure on
import prices.

"We won't just cut for the sake of cutting," Attiyah said.

"I don't want to see my consumers angry, I believe the
customer is always right but we have to be careful about the
balance between demand and supply."

OPEC has not needed to reduce production limits since late
2001, when it slashed supplies on condition that independent
producers contribute. They resisted until prices slumped and then
fell into line.

Russia, Mexico, Syria, Oman, Egypt and Angola among non-OPEC
will be represented officially in Doha, for the first time at an
extraordinary OPEC meeting.

The main subject of oil market debate, Iraq, will not send a
delegation, an issue which has rankled Iraqi officials.

Attiyah acknowledged there had been no contact between OPEC
headquarters and Iraq since the U.S. occupation, but urged Iraqis
at Baghdad's interim authority to get in touch.

"I did not receive any request from Iraq, but personally I'd
be happy to talk to them," he said, adding he hoped Baghdad would
be able to attend OPEC's next scheduled meeting in September.

On the same development Attiyah said OPEC would not switch
dollar-denominated oil sales to the euro, despite the fall in the
value of the U.S. currency.

He said the dollar's decline versus other leading currencies
like the euro and the yen had hurt OPEC revenues and helped oil
importing nations.

"We are facing a very difficult situation with the dollar," he
said.

"The dollar has lost 20 percent of its value against the euro.
The customer is receiving a discount from us."

The euro hit a record high last week at US$1.19, rising 11
percent since the start of 2003 and is up 45 percent from a low
of 82 cents in late 2000.

But Attiyah said there was no prospect of a change that would
erode the overriding power of the U.S. dollar as a global
currency.

"We will stick with the dollar. It is very difficult to
change," he said. "Assume we changed to the euro and six months
later the euro fell, we would have to switch back."

Any decision by OPEC to denominate oil sales in euros, even
just to European customers, would severely undermine the dollar's
status as the standard currency of international trade.

OPEC meets on Wednesday with oil prices near $31 for U.S.
crude, pricing the cartel's own index of crudes near the top end
of its $22-$28 target range.