OPEC to decide on oil supply adjustments, says Iran

Iran’s oil minister said today that OPEC would make any decision on adjusting oil supplies in a collective manner, comments that could allay fears his country would use the meeting as a stump speech over its nuclear ambitions.

Arriving in the Austrian capital for tomorrow’s meeting, Kazem Vaziri Hamaneh that “we’ll look at the conditions of the market and decide collectively”.

Iran, which has been under international pressure over its renewed nuclear programme, has said in recent weeks that a build-up of excess supply is reason enough to cut production.

Venezuela, which consistently argues in favour of defending high oil prices, has said it would support such a move.

“OPEC should be ready to cut at this meeting,” Rafael Ramirez, Venezuela’s Minister of Energy and Petroleum said today, noting that markets are oversupplied by two million barrels.

But other members, including Algeria and Saudi Arabia, the world’s largest oil producer, are firmly against reducing the quota of 28 million barrels a day.

Saudi Oil Minister Ali Naimi, one of the most influential voices in the Organisation of Petroleum Exporting Countries, said yesterday that the group had no reason to cut output at the meeting.

“Absolutely not,” he said, when asked about a possible cut.

Algerian Oil Minister Chakib Khelil said on Saturday that OPEC will maintain its current production quota.

“There is a consensus with the member countries to maintain the current quota as there is enough oil in the market,” Khelil said. He said he expected the price of oil to fall to around $50 in the second quarter.

The meeting will have two no-shows, including Kuwaiti Oil Minister Ahmed Fahad al-Ahmad al-Sabah. Instead, Kuwait will be represented by Siham Abdulrazzak Razzouqui.

Yesterday, Iraq’s government said Oil Minister Ibrahim Bahr al-Uloum wasn’t going to attend, either. No reason was given.

Iran, a founding member of OPEC and its second-largest oil producer, could use the meeting to withhold all or part of its 2.4 million barrels a day of exports as a response to criticism over its nuclear ambitions.

The nation insists the programme is aimed at generating electricity, while the US and some European nations fear it could be used to develop nuclear weapons. The International Atomic Energy Agency is to meet to discuss Iran on Thursday.

But Iran’s call for cuts is unlikely to be successful, said John Waterlow of Wood Mackenzie Consultants in Edinburgh, Scotland.

“Even if Iran does intend there should be a cut, other members wouldn’t agree to that,” he said, adding that OPEC members wouldn’t look kindly upon any political grandstanding.

Edmund Daukoru, the president of OPEC and Nigeria’s oil minister, downplayed worries that Iranian oil exports could be disrupted if the UN were to impose sanctions on it.

“OPEC spare capacity would be able to pick up some of the slack” if Iranian supplies were disrupted, he said at the World Economic Forum meeting in Davos, Switzerland, last week. OPEC’s spare capacity stands at between 1.5 million and two million barrels a day.

Even though supply has outpaced demand in recent weeks and allowed global oil inventories to build, US crude oil futures are again near record levels around 70 US dollars (£39.61) a barrel. That makes it less likely OPEC will put the brakes on, even though ample supplies would theoretically pose a risk to high prices.

Light, sweet crude for March delivery rose 45 cents to $68.21 a barrel on the New York Mercantile Exchange in Asian electronic trading. The contract on Friday rose $1.50 to settle at $67.76 a barrel.

Besides Iran, worries include instability in Nigeria, the world’s eighth-largest oil producer.

Attacks on platforms and pipelines in the oil-rich Niger Delta over the past month have killed dozens of soldiers and civilians and cut 10% of the nation’s daily oil output.