- The Washington Times - Wednesday, March 12, 2003

VIENNA, Austria (AP) OPEC members agreed yesterday to stick with their current crude oil production quotas but pledged to boost output in the future to keep supplies flowing in case of any serious disruption.
Representatives of the Organization of the Petroleum Exporting Countries ruled out formally raising output now as a way of reassuring nervous markets before any U.S.-led attack on Iraq.
However, they took extreme care not to mention such a conflict as a likely source of disruption, apparently afraid of seeming to support such a war simply by preparing to respond to its potential effect on markets.
Despite sharply higher oil prices, OPEC members argued that the world has enough crude to meet demand and blamed Middle East tensions for causing fears of a potential shortage.
"We are studying the market and keeping abreast of it," Saudi Oil Minister Ali Naimi told reporters. "There is no shortage of supply, the market is in balance, there is plenty of oil and there is a commitment to do our best within our capabilities, which we think are enough to satisfy any possible shortage in the market for whatever reason."
OPEC's president, Abdullah bin Hamad Attiyah, confirmed that it was not changing its output target of 24.5 million barrels a day. Delegates planned to meet on June 11 in Doha, Qatar, to review market conditions, he said.
OPEC officials announced their decision after meeting for 2 hours at the group's headquarters in Vienna. OPEC pumps about a third of the world's crude.
Markets worry that a conflict with Iraq would halt that country's 2 million barrels in daily exports. The effect on supplies and prices of crude could be more severe if fighting spread beyond Iraq's borders.
"The international political tensions have, without any doubt, reduced OPEC's influence on prices," Mr. Attiyah said in a speech to delegates at the start of their meeting.
He added that OPEC must make a plan to cope with "any radical change in market conditions which may result from developments in the Middle East." This was as close as OPEC's official proclamations went to mentioning a war against Iraq, one of its founding members.
Algerian Oil Minister Chakib Khelil said the group could produce an additional 2 million to 4 million barrels a day in an emergency. An expected drop in seasonal demand in the spring should also help ease pressures on supply, he said.
However, many OPEC members are already pumping all they can to profit from prices that are near 12-year highs, and it is not clear how much more oil OPEC could produce even if it wanted to.
The U.S. Energy Administration reported last week that OPEC's spare production capacity, excluding Iraq, was no more than 2 million barrels a day.
That would give the group just enough extra barrels to cover a disruption in Iraqi supplies but no more.
Bill Edwards, an independent energy consultant from Houston, argued that OPEC has "zero" ability to raise output from current levels.
"I think they're producing all they can of the crude that refiners want," he said.
April contracts for U.S. light, sweet crude ended at $36.72 a barrel in New York, down 55 cents from Monday's close.
Brent crude futures for April delivery were down 34 cents at $33.35 in London.

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