Oil production 'at its ceiling'

Venezuela’s foreign minister said yesterday that Opec would not raise oil output because the cartel is already producing at its ceiling of 26 million barrels per day.

“The current price instability stems from the instability of a producing country, and as long as there is war in Iraq the oil price will continue going up,” minister Jesus Perez told reporters at Rio’s airport.

Perez was returning to Venezuela after a meeting of foreign ministers of the Rio Group, made up of 19 Latin American countries.

The minister could not say how much oil his country is pumping or how much it is capable of producing. Venezuela’s Opec quota is 2.99 million barrels per day.

“All decisions regarding output are made by Opec,” Perez said.

Oil prices are breaking records and were near $50 per barrel on Friday.

Venezuela is the world’s fifth-largest oil producer and a key supplier for the United States.

Officials say Venezuela’s capacity was hurt by a general labor strike early last year, part of efforts to topple President Hugo Chavez. Chavez won an overwhelming victory last Sunday in a recall referendum, with about 60 percent of the vote.

With the country’s budget based on an average price of $20 per barrel, Perez said the price hikes are bolstering a social development fund that could reduce poverty affecting almost two-thirds of Venezuelans.

At the meeting of the Rio Group, Perez said he had proposed to his colleagues from around the region that they formally commit themselves to fighting social ills.

He said the Venezuelan government proposes to solve its crisis with ”more democracy and less poverty”.

Perez also said Venezuela plans to terminate the “group of friends” of Venezuela, formed last year to mediate the conflict between Chavez and opposition groups.

Sunday’s referendum marked the end of the country’s need for help, he said, thanking Brazil for its participation in the group.

The group also included Chile, Spain, the United States, Mexico and Portugal.

Perez complained that the US and Spain, under the previous government of Prime Minister Jose Maria Aznar, ”did not act as friends in the group, but as enemies”.

Relations between Caracas and Washington have soured since Chavez took office in 1999. The Venezuelan president has become an outspoken critic of US initiatives in the region including the proposed Free Trade Area of the Americas.