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OPEC stabilises output at 25.4m barrels per day
( 2003-08-01 13:24) (Agencies)

Organization of Petroleum Exporting Countries (OPEC) oil ministers agreed yesterday to leave its total output quotas at 25.4 million barrels per day, but indicated they might cut production in September to ward off excess supply as exports pick up from post-war Iraq.

OPEC decided to maintain its official production ceiling which has been in force since June 1, an official announced, following a meeting of ministers of petroleum from member countries in Vienna.

The market was "stable and well supplied," with prices within the cartel's target band of US$22-28 per barrel, he said in a statement.

"Prospects for the fourth quarter of 2003 and 2004, however, indicate that estimated demand growth is less than the expected increase in supplies," underscoring the need for "continued vigilance," the official said.

"OPEC has real concern for oversupply of oil for the end of this year and the beginning of 2004," Iranian Oil Minister, Bijan Namdar Zangeneh, added.

OPEC President, Abdullah Al-Attiyah, who is also Qatar's energy minister, said that in September "all options are open" and the decision would be taken in view of supply and demand projections, and Iraq's level of production.

Oil prices rose in London after the announcement. The price of reference Brent North Sea crude for September delivery gained 25 cents to US$28.75 per barrel.

OPEC called the meeting, the second in as many months, at its last conference in Doha in June, amid concern that a resumption of exports from Iraq after the end of the war there might trigger a slump in oil prices.

But more than three months after the fall of Baghdad, world markets are still waiting for the return of Iraqi oil exports in any significant quantity. Looting, sabotage and security concerns have all hampered efforts to rebuild the country's oil industry

The US-led coalition ruling Iraq, which is not included in OPEC's quota system, said this week that the country's oil output had exceeded one million bpd. But that is still far short of Iraq's pre-war production levels of 2.5-2.7 million bpd production, of which more than 2.0 million bpd were exported. And with oil stocks in consumer countries significantly lower than this time last year, prices have remained resilient, with OPEC's basket price near the top end of its target band.

Yet, while the cartel appears content with the current situation, prices are still too high from the point of view of oil-importing countries struggling to breathe life into the sluggish global economy. London Brent oil prices have risen by over 15 per cent since the fall of Baghdad in early April.

OPEC controls nearly one third of global oil production with member countries including, Algeria, Iraq, Iran, Indonesia, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Iraq is excluded from OPEC's system of quotas because of sanctions imposed on the country in the wake of its invasion of Kuwait in 1990.

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