OPEC to cut output to avoid price collapse

OPEC to cut output to avoid price collapse

Agence France-Presse, Doha

OPEC can be expected to agree to slash production at a
ministerial meeting in Qatar on June 11 to avoid a price
collapse, OPEC President Abdullah bin Hamad al-Attiyah told AFP
on Monday, strongly defending Iraq's position within the oil
cartel.

"The cut will be the topic that will be very carefully
discussed," Attiyah said, noting that confusion about Iraq's
return to the market and inventories made it difficult to set a
figure.

"I believe maybe we will cut it because we believe that in all
earnestness there will be more oil in the market and the market
cannot accept it.

"We don't want to see this huge floating of oil, collecting
dramatically and putting pressure on the oil price. We don't want
to see ourselves in the position of 1999," when prices collapsed
to $10 a barrel on oversupply."

Iraq's return to the market after the U.S.-led war is
predicted to come around the end of June, but Attiyah said it was
difficult to read.

The Organization of Petroleum Exporting Countries would "also
treat very carefully the re-entry of Iraq to the market," at the
June talks in Doha.

"It's really very difficult," he stressed, recalling
conflicting reports of the exact timing and how quickly Iraq
would reach pre-war daily average production of 2.7 million
barrels per day (bpd).

"This also we have to study very carefully," he said. "The
analysis is very confused now about when Iraq is coming."

He took strong issue with U.S. suggestions that Baghdad may
pull out of OPEC.

"I heard a lot of rumors saying maybe Iraq will withdraw,"
Attiyah said in his office at Qatar's energy ministry. "Is it
true? I don't believe it. Is the interest of Iraq tomorrow to see
the oil price at six dollars? I don't believe it. I don't think
this a pragmatic answer."

Washington's chief executive officer of Iraq's oil advisory
board, Philip Carroll, told the Washington Post on May 17 Iraq
may be best served by ignoring OPEC quotas and producing as much
oil as it can.

Attiyah has already said that for oil-related matters OPEC
would not recognize the U.S. as a representative of Iraq, which
boasts the world's second largest oil reserves, and would await a
new government in Baghdad.

Iraq for the past decade has remained an official OPEC member
but has exported its oil under United Nations (UN) auspices as
part the sanctions regime imposed following its 1990 invasion of
Kuwait.

Sanctions were lifted last week, paving the way for exports
under the post-war U.S. administration in Iraq.

Iraq's last OPEC quota in July 1990 was 3.14 million bpd, the
same as Iran and about 14 percent of OPEC's production ceiling.
Before the war Iraq's antiquated oil industry could manage to
pump an average of 2.7 million bpd.

Crude slumped after OPEC's unexpected move to raise output
ceilings from June 1 while also trying to crack down on quotas
busting.

However, prices have since risen despite the removal of UN
sanctions.

In London, benchmark Brent North Sea crude oil for July
delivery rose to $26.34 per barrel in late Friday trading from
$26.15 a week earlier.

In New York, light sweet crude June-dated futures reached
$29.30 from $28.75 the previous week, but closed at $29.16 for
July delivery.

Dealers took fright after low weekly U.S. oil inventory
figures were released on Wednesday.