- The Washington Times - Sunday, July 27, 2003

LONDON (AP) — OPEC ministers are not nearly as concerned these days about oil exports from a resurgent Iraq undermining high prices.

Chronic looting and sabotage have hampered Iraq’s efforts to ramp up oil exports and exploit its crude reserves, which rank second in size only to those of Saudi Arabia. The longer Iraq takes to restore its once-mighty oil industry, the longer its fellow cartel members can put off cutting their own output to make way for fresh Iraqi barrels.

Demand for oil remains strong, with the United States and other major importers running down their inventories and the peak summer driving season shifting into top gear. The price for OPEC’s benchmark crude has been stuck at or near $28 a barrel — the top end of the group’s desired price range.

Given such conditions, representatives of the Organization of the Petroleum Exporting Countries meeting Thursday in Vienna, Austria, will feel little need to tinker with output, oil analysts say.

“At these sorts of numbers, they must be quietly rubbing their hands,” said Rob Laughlin, managing director of London brokerage GNI Man Financial.

OPEC supplies about a third of the world’s crude. The group agreed at its June meeting to leave its production ceiling unchanged at 25.4 million barrels a day.

“OPEC should retain the current production quota, because the current price is still quite good,” Purnomo Yusgiantoro, Indonesia’s minister of energy and mineral resources, said in comments reported last week by Indonesia’s national news agency, Antara.

Saudi Arabian Oil Minister Ali Naimi, seeking to reassure consumers, insisted that oil prices “are not high” in an interview Thursday with the London-based Arabic daily Al-Hayat.

“Even if we do not change the production ceiling, it is important to meet to review the market situation and developments and to hear the views of the 10 ministers regarding the developments in the markets,” Mr. Naimi explained.

The United Arab Emirates’ top oil minister, Obaid bin Saif al-Nasseri, yesterday said that there are no “convincing reasons” to change the ceiling.

The big issue, as always, will be Iraq.

Although Iraq is a founding member of OPEC, it hasn’t participated in OPEC’s quota agreements since Saddam Hussein invaded Kuwait in 1990. Iraq’s erratic exports under the U.N. oil-for-food program made it the cartel’s biggest wild card. Iraq stopped pumping crude altogether during the U.S.-led invasion, and it started offering long-term supply contracts just last week.

In anticipation of an early resumption of Iraqi exports, other OPEC members began this spring to rein in excess production and stick more closely to their agreed quotas. Led by Saudi Arabia, they trimmed their excess output by 1 million barrels a day in May and an additional 250,000 barrels in June, Mr. Laughlin said.

Some oil ministers suggested at OPEC’s June meeting that it needed to go even further and lower its production ceiling to avert a price crash once Iraq began pumping again at its prewar level of 2.1 million barrels a day.

Few of them foresaw the problems and delays Iraq would face. Looters and, more recently, saboteurs have compounded the task for American and Iraqi oil workers trying to repair facilities left in tatters after 12 years of U.N. sanctions and a lack of investment.

“It’s still not looking like OPEC needs to get worried about a major return of Iraqi oil to the market,” said John Waterlow of Wood Mackenzie Consultants in Edinburgh, Scotland.

OPEC ministers likely will show “a steady hand on the tiller” in Vienna and decide to do nothing, he said.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide