OPEC, unlikely to cut production, focuses on 'fear factor' in oil markets

VIENNA, Austria -- OPEC oil ministers, unwilling to cut production with prices lingering above $60 a barrel, focused Tuesday on political instability, terrorist attacks and other forces giving the world's crude markets the jitters.

Worries over Iran's nuclear ambitions, militant threats in Nigeria and attacks on Middle East facilities stoked concerns about supply disruptions as the 11-nation Organization of Petroleum Exporting Countries prepared to map out its pumping and pricing strategies for spring and summer.

With consensus building against the idea of lowering production -- and spiking prices even higher -- OPEC planned to assess "the influence of new political issues on the oil market," Qatar's oil minister, Abdullah bin Hamad al-Attiyah, said before Wednesday's meeting.

Attacks in Nigeria

Recent attacks by militants on Nigerian pipelines and oil facilities have reduced that country's production by 455,000 barrels a day. Nigeria normally exports 2.5 million barrels daily.

"The tangible, physical disruption of Nigerian supply has propped up prices over the past few weeks," said Jason Schenker, an economist with U.S.-based Wachovia Corp. "That's a big deal. And then we just saw prices shoot up again over Iran."

Edmund Daukoru, OPEC's president and Nigeria's oil minister, said Tuesday the African nation was "committed to providing adequate security for operators in the Delta." He said Nigeria planned to pump an additional 600,000 barrels a day by June.

Iran's OPEC governor, Hussein Kazempour Ardebili, has sought to reassure the world that his country's escalating standoff with the West over its suspect nuclear program would not affect its exports of crude.

The International Atomic Energy Agency's 35-nation board is meeting this week to ease the standoff with Tehran, which has vowed to begin large-scale uranium enrichment if the U.N. Security Council intervenes.

"If we were able to reach a 'comfortable unease' on the Iranian situation, I think we'd see prices drop into the low $50s," Schenker said.

Many OPEC members repeatedly have said that prices are optimal in the $40 to $50 range.

They have hovered considerably higher for months: On Tuesday, light, sweet crude for April delivery was down 56 cents to $61.95 a barrel on the New York Mercantile Exchange. April Brent on the ICE Futures exchange dropped 55 cents to $61.79 a barrel.

Al-Attiyah said oil ministers also would discuss demands on the market in the second quarter, a period when demand usually decreases.

The International Energy Agency estimates that demand will fall by 2 million barrels a day between April and June.

Venezuela's oil minister, Rafael Ramirez, said Tuesday he would press other OPEC members to cut production by at least half a million barrels of crude a day. The South American country is one of the group's most strident voices in favor of constraining output to keep prices high.

"The market is overstressed ... this means we have to cut around 500,000 barrels a day," Ramirez said.

But Mohammed al-Hamli, oil minister of the United Arab Emirates, insisted the cartel's output was "already adequate," and Kuwait's energy minister, Sheik Ahmed Fahd Al Ahmed Al Sabah, on Tuesday reiterated his view that OPEC should maintain its current output.

Oman's oil minister, Mohammed bin Hamed al-Rumhy, said concerns of oversupply did not justify a cut in output and expressed doubt that OPEC would support such a move.

OPEC's official output target is 28 million barrels per day, though that does not include Iraq, which adds an additional 1.5 million barrels. Some members, like Venezuela, fret that there could be a glut of up to 2 million barrels a day in the second quarter, in part because of a milder than usual winter in the northern United States.

OPEC's acting secretary-general, Mohammed Barkindo of Nigeria, said Tuesday that he expected no surprises from Wednesday's meeting.

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Associated Press reporter Nikolaus Jilch contributed to this report.

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On the Net:

OPEC, www.opec.org