OPEC split over production cuts
Iranian Oil Minister Bijan Namdar Zangeneh said on Tuesday that OPEC’s market monitoring committee would advise the cartel to keep its output rations unchanged.
Asked whether the committee would recommend no change to OPEC’s quotas, Zangeneh replied:
“Yes, yes … No change and to comply with the ceiling we discussed.”
The Iranian minister estimated total OPEC production as running at 26.5 million barrels per day (bpd), or 1.1 million bpd above its official limit of 25.4 million bpd.
His comments came ahead of a meeting on Wednesday for members of the Organisation of Petroleum Exporting Countries in Qatar.
OPEC members were split over production cuts with Kuwait insisting that the oil cartel did not need to tighten the taps of oil.
Kuwait Oil Minister Sheikh Ahmad al-Fahd al-Sabah said he wanted OPEC to keep production unchanged “from now until September at least”.
OPEC President Abd Allah al-Attiyah said the cartel would consider reducing production rations to accommodate the resumption of oil exports from Iraq.
Iraq is due to resume oil exports in the third week of June.
“Now is the right time for OPEC to study how to accommodate Iraq, how to make room for Iraq, by, you know, cutting production from others”, said al-Attiyah.
Al-Attiyah, who is also Qatar’s oil minister, said OPEC should act now before the emergence of the crisis.
But Kuwait argued that no immediate action was needed, especially that world oil prices were still within OPEC’s recommended average price.
Some in OPEC expressed their concern that strong prices could quickly change if there was a surplus as a result of a gradual rebuilding of Iraqi exports.
“We are concerned because prices are high not because of a lack of oil, they are high because of uncertainty”, said Algerian Oil Minister Chakib Khalil.
But al-Attiyah told Aljazeera that the fluctuation of prices had more psychological than factual consequences.
He said that he heard Iraq would start producing one million barrels starting this month.
Some in OPEC believe that for Iraq to return to its pre-war 2.7 million barrels a day could take longer than predicted, giving the cartel time to adjust to the change.
“The situation in Iraq is much more complicated than expected. I’m not expecting significant exports from Iraq until next year”, said Ali Rodriguez, head of the state Venezuelan oil company PDVSA.
Powerful Gulf members in OPEC, mainly Saudi Arabia, are likely now to try to ensure compliance with the existing 25.4 million bpd.