Opec sticks to current production levels

Opec ministers holding a crucial summit today in Qatar voted to keep production levels unchanged because of delays in the resumption of Iraqi oil exports.

Abdullah bin Hamad al-Attiyah, president of the 11-nation cartel, said ministers would hold an extraordinary meeting on July 31 to reassess the situation.

He said they would study the impact of Iraq’s return to the oil market and that Opec would consider all options to maintain its interests.

Member states were today warned by Opec Secretary-General Alvaro Silva not to exceed their quotas and to comply with the production schedule.

Attracted by high prices, members of the Organisation of Petroleum Exporting Countries have been exceeding their designated quotas and have oversupplied the market by about 1.5 million barrels a day.

The oil minister of the United Arab Emirates, Obaid bin Saif al-Nasseri, also called on member states to respect their quotas.

“We should look into reducing actual production of member states” rather than adjust the theoretical production ceiling, he said.

Today’s decision keeps that ceiling at 25.4 million barrels a day.

There was intense debate among the delegates about when Iraq was expected to resume exports, and when Opec would need to cut back on production in order to maintain a stable price as those exports hit the market.

Bijan Namdar Zanganeh, Iran’s oil minister, said he expected Opec would keep its output at current levels “for two to three months”.

The Venezuelan and Nigerian delegates both said they thought production levels might stay the same until the end of the year.

Opec President Abdullah bin Hamad al-Attiyah told the ministers gathered in Doha that the state of Iraq’s oil industry remained unclear.

Iraq says it hopes to export one million barrels a day by the end of June and two million barrels a day by the end of the year.

But analysts said those figures were too optimistic due to the poor state of Iraq’s oilfield infrastructure, which suffered war damage, post-war looting, and a chronic shortage of spare parts under 12 years of UN sanctions.

Kuwait’s acting oil minister, Sheikh Ahmad Fahd al-Ahmad, said Iraq needed until September to raise its production to two million barrels a day, and that Opec production could remain unchanged until then.

Oil producers outside Opec are also concerned about the impact of Iraqi oil when it comes on stream – Russia and Mexico both sent delegates to today’s summit.