Rising prices to halt OPEC output cuts

THE Organisation of Petroleum Exporting Countries, supplier of a third of the world’s oil, will probably defer output cuts until later this year because prices are rising and Iraqi exports are delayed, officials and analysts said.

The group meets tomorrow in Doha, Qatar, to consider a response to the impending return of sales from Iraq, which pumped 3% of world supply before the war.

Exports stopped when US and British forces invaded on March 20, and looting since then has hampered efforts to restore production.

“OPEC doesn’t see any need to change the quota for now,” said Leo Drollas, deputy executive director at the London-based Centre for Global Energy Studies, a consulting company founded by former Saudi oil minister Sheikh Zaki Yamani.

“Prices are too high. They will need a cut sometime in the summer.”

Crude oil has risen by more than a fifth in New York since April to around $31 a barrel, because of a drop in inventories and an April 24 accord by OPEC to lower output as of this month.

A cut in quotas in Doha is unlikely, said Qatari oil minister Abdullah bin Hamad al-Attiyah and Indonesian oil minister Purnomo Yusgiantoro last week.

Crude oil for July delivery slid 36 cents to $30.92 a barrel in after-hours electronic trading on the New York Mercantile Exchange, as of 11.40 am in London.

Oil prices are at an acceptable level, said OPEC Secretary-General Alvaro Silva in an interview last week at OPEC’s headquarters in Vienna, signalling he also favours no change in output.

The 10 OPEC members outside of Iraq restrain production to keep their price index between $22 and $28 a barrel. The index was at $26.77 Thursday and has averaged $25.41 for the last three years.