OPEC - Increased oil output unlikely

VIENNA, Austria -- OPEC's president joined oil ministers from several of the cartel's member countries Wednesday in reinforcing expectations that they won't change crude output when meeting to reassess a market that seems to be going all their way.

With Iraq still struggling to restore its crude production and oil prices hovering near the top of the group's targeted price range, the Organization of Petroleum Exporting Countries will probably wait until September to make any adjustments, OPEC President Abdullah bin Hamad Al-Attiyah told reporters.

Strong market position

Tight oil inventories in the United States and other importing nations have strengthened OPEC's market position. Asked if OPEC needed to change its production at Thursday's meeting in Vienna, Al-Attiyah said: "I don't think so."

Libyan oil minister Abdulhafid Mahmoud Zlitni said, "There doesn't seem to be any need for a change," as he arrived at a downtown hotel.

These comments echoed a similar message last week from Indonesia's Minister of Energy and Mineral Resources Purnomo Yusgiantoro, who won't be attending Thursday's meeting in the Austrian capital. Saudi Arabian oil minister Ali Naimi has also made clear that he sees no need to alter OPEC's output ceiling. Saudi Arabia is OPEC's most influential member and the only one with significant reserves that it can tap on short notice.

OPEC, supplier of a third of the world's crude, has an official production ceiling of 25.4 million barrels a day. Iraq is one of the group's 11 members but hasn't participated in OPEC production quotas since 1990.

Anticipating Iraq

OPEC decided in June to meet this month, anticipating that Iraq would return quickly to the oil market in the wake of the U.S.-led invasion that toppled the government of former President Saddam Hussein. Iraq's fellow OPEC members worried then that a sharp increase in Iraqi oil exports could upset the market and force them to curtail their production if they hoped to keep prices stable.

However, widespread looting and apparent sabotage have hampered Iraq's ability to increase exports, and the other OPEC members see little reason to change their output now.

The price for OPEC's benchmark blend of crudes is in "a comfortable area" at around $28 a barrel, United Arab Emirates' oil minister Obaid Al-Nasseri told reporters. He, too, dismissed any immediate need for OPEC to adjust its quotas.

"It's obvious what we're going to do," Algerian oil minister Chakib Khelil said Tuesday.

Quick meeting

Due to this shared view in favor of holding output steady, OPEC officials expected this meeting to end more quickly than most. Unlike previous meetings, they said this one would skip the informal session that typically precedes the formal gathering at OPEC's Vienna headquarters.

Iraq has cast a shadow over this meeting, despite delays in its efforts to restore output to the 2.1 million barrels a day that it was pumping before the U.S.-led invasion. Iraq is likely to loom as a bigger factor when OPEC meets again on Sept. 24, and officials are already looking ahead to that meeting as possibly more contentious.

Zlitni of Libya said Iraq's impact on crude supplies should become clearer by September.

"As it looks now, there shouldn't be any drastic changes" in either prices or quotas during the fourth quarter, he said.

"Inventories are a little low, but with Iraq coming to market by the end of this year, things will balance themselves out."

In Iraq, looters have compounded the challenge for American and Iraqi oil men trying to repair oil facilities left in tatters due to 12 years of U.N. sanctions and a dearth of investment.

Although Iraq has started exporting crude from its southern oil fields, attacks on pipelines in northern Iraq have prevented it from shipping any crude from that region. Iraq offered long-term export contracts earlier this month for the first time since the war.

Al-Attiyah, OPEC's president, expects to visit Iraq in September at the invitation of Iraq's Oil Ministry.