OPEC trying to restrain oil overproduction-Lukman
OPEC trying to restrain oil overproduction-Lukman
Robert Gibbons Reuters New York
OPEC President Rilwanu Lukman said on Monday he was concerned about the level of the oil cartel's overproduction and that all members were trying to restrain output.
The remarks suggested a shift of approach from top OPEC officials who said earlier this month the group's quota-cheating was being absorbed by world markets and not hurting oil prices.
"We are concerned about overproduction," he told Reuters in a telephone interview. "The whole of OPEC is trying to restrain it. Everyone is on board."
Lukman estimated that OPEC was producing around two million barrels per day (bpd) above an official 21.7 million bpd ceiling for 10 cartel members who have formal quotas.
A Reuters survey estimated that the cartel pumped more than 3 million bpd above the group's official ceiling in October.
Oil prices have fallen around 20 percent since late September as traders expect rising production from OPEC -- which supplies around a third of the world's oil -- to replenish lean inventories in consuming countries.
Lukman said OPEC was worried oil prices would fall below the $22 a barrel floor of the group's price target range in the second quarter next year if producers did not rein in supply.
"Yes, we fear it. That is why we'll do everything to make sure people are toeing the line and not overproducing," he said.
The higher supply from OPEC has in recent weeks outweighed fears that military conflict in Iraq could disrupt crude flows from the oil-rich Middle East.
Venezuela's state oil company PDVSA boss Ali Rodriguez, a former OPEC Secretary-General, said last week there is a growing danger that oil output increases by OPEC and other exporters could flood world markets.
Concern over Middle East supply appeared to reemerge on Monday as U.N weapons inspectors returned to Iraq for the first time in four years. New York crude oil prices jumped more than $1 a barrel to top $26.70.
The U.S. has threatened military action if Iraq does not comply fully with renewed weapons inspections.
Lukman reiterated that OPEC producers would step in to meet any shortfall if supplies were disrupted during a military conflict.
"We don't know what is going to happen in the next few weeks with the Americans and Iraq. We've always maintained that whatever the disruption, if there is any disruption, we would act."
OPEC will meet to decide production policy on Dec 12. Lukman said there was no need to change production quotas while oil prices were still in OPEC's $22-28 a barrel target band. OPEC's basket of crude oil was valued at $23.10 a barrel before Monday's price rise.