Saudi Arabia holds line on cartel oil output strategy

OPEC power Saudi Arabia was tight-lipped yesterday on cartel output strategy amid a chorus of opposition to any relaxation in tough output curbs.

OPEC ministers meet on September 19 in Japan to chart oil output policy for the fourth quarter at a time when prices are near their highest levels this year on concerns over a potential US-Iraq conflict.

"Talk at the time being about what decisions OPEC will take at its upcoming meeting is premature," Saudi Oil Minister Ali al-Naimi said in a statement carried by the official Saudi Press Agency (SPA).

"Adjusting the production ceiling is done at the OPEC ministerial meeting after consultations amongst them (the ministers) to take the appropriate decisions based on the prevailing conditions at the time and with consensus by all."

Analysts expect Saudi Arabia, the world's biggest oil exporter, to push for a supply boost the first since 1999 to avoid a price hike this winter, despite strong opposition from Venezuela and no clear support from fellow OPEC members.

But Naimi dismissed talk of a Saudi position on opening the taps: "Talk of a specific position for the kingdom is untrue."

Venezuelan President Hugo Chavez said over the weekend he believed Saudi Arabia would not want OPEC to raise output at the cartel meeting.

Naimi's remarks followed comments made last week by a Gulf source who indicated the cartel was on course to hoist supplies in September to meet fourth quarter demand.

Analysts warn that, unless OPEC releases more oil, stockpiles will drain and prices will soar, but a modest increase of about one million barrels per day would go some way towards legitimising the group's rampant overproduction and help persuade those most reluctant to boost supplies.

OPEC has held to its official output ceiling of 21.7m bpd since January, but output for ten members excluding sanctions-bound Iraq was running 1.8 million bpd above its self-imposed limits during July.