The prospect of boosting oil output to make up for the loss of exports from Iraq was postponed for a month on Tuesday when the Organization of the Petroleum Exporting Countries (OPEC) arranged to discuss the issue early next month, said reports.
OPEC’s decision came at a ministerial meeting in Vienna.
The key subject was Iraq's decision on Monday to halt oil exports, to protest the United Nations' redrawing of conditions for the 1996 oil-for-food program that allows Iraq to export oil despite UN sanctions against the country.
Iraq accounts for nearly five percent of world oil exports and ministers are wary of allowing a shortage of supply.
OPEC agreed to leave output targets at 24.2 million barrels per day after deciding that ample crude inventories and stable prices meant there was no need to panic, reported the Money Telegraph newspaper.
OPEC arranged an emergency meeting for July 3.
The Brent crude price reacted by bouncing between $28.93 and $29.34 after settling at $29.26 on Monday.
The price has risen 21 percent in London so far this year.
The July meeting will "review the market situation and take whatever measures are considered appropriate at that time," the cartel said in a statement after Vienna’s meeting.
OPEC president Chakib Khelil defended the decision to keep production unchanged for now.
"What concerns us is that we don't take undue decisions now and see prices collapse," he said, quoted by AFP.
Iraq's export cut has raised fears of skyrocketing prices like those which sparked fuel protests last year.
But Saudi kingpin Oil Minister Ali Al Nuaimi, whose country is by far the biggest producer in OPEC, reiterated his pledge to compensate for any shortfall Tuesday, after the decision was taken.
"Saudi Arabia will do everything to ensure that the market is balanced," he told reporters. "If that implies a rise of production, the answer is yes," he said.
Meanwhile, OPEC leaders said it was impossible to predict how long Baghdad would maintain its suspension, and even questioned exactly what Iraq was doing.
"We have different interpretations of what Iraq has done. The way we understand it there hasn't been a complete cut of production," Khelil said.
OPEC Secretary General Ali Rodriguez echoed the comments.
"Even the deputy minister of Iraq doesn't know exactly how long this situation will last," he said.
"So we have to wait," he added.
Analysts said the accord to meet again in July, two months earlier than the next scheduled OPEC meeting in September, was to demonstrate to the West that OPEC shared its concern about the risk of oil prices skyrocketing as they did last year, sparking fuel protests in Europe.
"It's to tell the market that they are aware that consumers in the West are concerned about rising prices. They just want to show their concern," said Medhi Varzi of Dresdner Kleinwort Benson.
Iraq's Oil Minister Amer Rasheed did not attend the meeting, saying he did not expect it to take any important decisions.
Iraq is not a member of OPEC's production quota system because of UN sanctions following its 1990 invasion of Kuwait – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)
