OPEC keeps output unchanged

Wednesday, February 1, 2006

VIENNA, Austria -- The Organization of Petroleum Exporting Countries agreed Tuesday to hold crude production steady, and its president said Iran had pledged not to withhold any oil because of its standoff with the West over its nuclear program.

OPEC President Edmund Daukoru of Nigeria said Iran, one of the cartel's founders, had assured him and other members that it would not curtail its oil production. The possibility that Iran will be referred to the United Nations Security Council for economic sanctions over its nuclear program had overshadowed this week's meeting.

"Iran has said they will not be cutting production," he said. "That is to mean that there will not be disruptions."

The decision to hold output steady at 28 million barrels a day had been widely expected after two days of informal meetings by the cartel's 11 members.

Qatari oil minister Abdullah bin Hamad al-Attiyah said a cut in output would be discussed at the March 8 meeting, noting that high oil prices now made any talk of a cut in the quota unsustainable.

"In December, we said we were going to cut 1 million. Now, we changed our decision because of the market situation," he said. "So we're very pragmatic."

Crude-oil prices eased slightly after OPEC announced its decision. Light, sweet crude for March delivery fell 6 cents to $68.29 a barrel on the New York Mercantile Exchange, while March Brent crude futures fell to $66.32 a barrel.

Prices had been seesawing amid concern over Iran's looming showdown with the West over its nuclear program. Saudi oil minister Ali Naimi, one of the most influential voices in OPEC, said that was not a factor in Tuesday's decision.

Iran, OPEC's second-largest oil producer, insists its program is aimed at generating electricity, while the U.S. 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.

Envoys from Britain, China, France, Russia and the United States decided this week they would recommend the IAEA should report Iran to the Security Council on Thursday.

Iran said such a referral has no legal justification and would be the end of diplomacy.

"Reporting Iran's dossier to the U.N. Security Council will be unconstructive and the end of diplomacy," said top nuclear negotiator Ali Larijani, according to state television.

Naimi discounted media reports that Iran had called for a cut in output ahead of the meeting and during the closed-door session. He said such reports were "completely not true."

"I did not hear the [Iranian] minister say anything, either before, during or after" the meeting, Naimi said.

Naimi said the decision to hold output steady was unanimous. But the group seemed less cohesive on the question of whether a cut may come at the next meeting in March.

Naimi said he didn't think it was needed, but said "it's really too early to tell -- we'll have to look at the market."

Venezuela's Rafael Ramirez was more succinct: "Yes, probably," he said.

Libyan oil minister Fathi Hamed Ben Shatwan said earlier that if a cut were made at the next meeting, it would take effect April 1 and be between 500,000 and 1 million barrels a day.

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