OPEC not likely to alter current level of oil output
VIENNA, Austria -- OPEC is pumping enough oil to meet the current level of global demand, but the group will be ready to adjust its crude output later in the year if the economic recovery gains momentum, a key oil minister said Tuesday.
For now, market conditions don't warrant a change in production quotas for the 11 members of the Organization of Petroleum Exporting Countries, Iranian oil minister Bijan Namdar Zangeneh told reporters. OPEC representatives are to meet Wednesday in Vienna, Austria.
, to review market conditions for crude and set their output policy for the coming months.
"I think we will roll over the ceiling of production," Zangeneh said, expressing a view that appears to have wide support among other oil ministers and OPEC officials.
Algerian Oil Minister Chakib Khelil and OPEC's outgoing secretary-general, Ali Rodriguez, said Monday that they too expected the group to agree this week to stick with its official output ceiling of 21.7 million barrels a day.
OPEC pumps about a third of the world's oil, and its production policy has a far-reaching impact on the prices consumers pay for gasoline and home heating oil. OPEC members made deep cuts in production last year in an effort to buoy sinking oil prices, but markets have rebounded since then as the U.S. economy and others have shaken off the worst effects of the Sept. 11 terror attacks.
Contracts of North Sea Brent crude for August delivery were trading at $25.46 a barrel Tuesday in London, up 19 cents from Monday's close. August contracts of U.S. light, sweet crude were up 19 cents, at $26.66 a barrel in after-hours trading in New York.
These prices were more than a third higher than the average spot prices in December for these benchmark grades of crude, according to statistics from the Paris-based International Energy Agency.
Part of the reason for the recent rise in oil prices has been anxiety about the possible effect a Middle Eastern conflict might have on crude supplies from the Gulf -- home to a majority of OPEC member countries including Iran, the group's second-largest producer after Saudi Arabia.
Zangeneh said OPEC would monitor market conditions closely and suggested it might decide to boost output at its next meeting in September.
"Everything depends on the global economic growth and the political situation, especially in the Middle East," he said as he arrived at his hotel in the Austrian capital.
Some energy analysts expect demand to begin to strengthen as early as this summer. Yasser Elguindi of Medley Global Advisors in New York predicts that OPEC will see a need to raise its production quotas in the fourth quarter -- a period when consumer demand for heating oil typically begins to surge in wealthy importing nations.
Many OPEC countries are already outstripping their quotas. In May, the group's 10 members other than Iraq pumped 1.4 million barrels of oil above their daily ceiling -- an excess of 6 percent, the IEA said in its most recent monthly oil report.
Iraqi exports are regulated by the United Nations, and Baghdad doesn't participate in OPEC's production agreements.
Venezuela is among the members believed to be exceeding its quota. A failed coup and continued political upheaval in that South American nation have raised questions about the Venezuelan government's commitment to its production quota.
Venezuela's oil minister, Alvaro Silva, has been tapped to succeed his compatriot Rodriguez as OPEC secretary-general. Zangeneh said OPEC expected to confirm Silva in the post this week.
Rodriguez resigned halfway into his three-year term as OPEC's top official after agreeing to take over as head of Venezuela's state-run oil monopoly, Petroleos de Venezuela, SA.