If they slow their production, prices will rise. Beginning salvo in the war with Iran?
Iran: OPEC to Decide Collectively on Oil
By MATT MOORE
AP Business Writer
VIENNA, Austria (AP) -- Iran's oil minister said Monday that OPEC would make any decision on adjusting oil supplies in a collective manner, comments that could allay fears his country would use the meeting as a stump speech over its nuclear ambitions.
Arriving in the Austrian capital for Tuesday's meeting, Kazem Vaziri Hamaneh said "we'll look at the conditions of the market and decide collectively."
Iran, which has been under international pressure over its renewed nuclear program, has said in recent weeks that a buildup of excess supply is reason enough to cut production.
Venezuela, which consistently argues in favor of defending high oil prices, has said it would support such a move.
"The market looks well supplied, in fact oversupplied, by 2 million barrels a day," Rafael Ramirez, Venezuela's Minister of Energy and Petroleum said Monday. "We believe OPEC has to be ready to cut, maybe now in this meeting, maybe at the next meeting."
He said the Organization of Petroleum Exporting Countries should cut its supply by as much as 1 million barrels a day.
But other members, including Algeria and Saudi Arabia, the world's largest oil producer, are firmly against reducing the quota of 28 million barrels a day.
Saudi Oil Minister Ali Naimi, one of OPEC's most influential voices, said Sunday the group had no reason to reduce output now.
"Absolutely not," he said, when asked about a possible cut.
Algerian Oil Minister Chakib Khelil said Saturday the group would maintain its current production quota.
"There is a consensus with the member countries to maintain the current quota as there is enough oil in the market," Khelil said. He said he expected the price of oil to fall to around $50 a barrel in the second quarter.
Libyan Oil Minister Fathi Hamed Ben Shatwan said OPEC didn't need to cut its oil output now, but needs to monitor prices heading into the second quarter.
"Libya feels that the oil price cannot fall below $50 a barrel," he told Dow Jones Newswires by telephone.
Iran, OPEC's second-largest oil producer, could use the meeting to withhold all or part of its 2.4 million barrels a day of exports as a response to criticism over its nuclear ambitions.
The nation insists the program is aimed at generating electricity, while the U.S. and some European nations fear it could be used to develop nuclear weapons. The International Atomic Energy Agency is to meet to discuss Iran on Thursday.
But Iran's call for cuts is unlikely to be successful, said John Waterlow of Wood Mackenzie Consultants in Edinburgh, Scotland.
"Even if Iran does intend there should be a cut, other members wouldn't agree to that," he said, adding that OPEC members wouldn't look kindly upon any political grandstanding.
Edmund Daukoru, the president of OPEC and Nigeria's oil minister, downplayed worries that Iranian oil exports could be disrupted if the U.N. were to impose sanctions on it.
"OPEC spare capacity would be able to pick up some of the slack" if Iranian supplies were disrupted, he said at the World Economic Forum meeting in Davos, Switzerland, last week. OPEC's spare capacity stands at between 1.5 million and 2 million barrels a day.
Even though supply has outpaced demand in recent weeks and allowed global oil inventories to build, U.S. crude oil futures are again near record levels.
Light, sweet crude for March delivery fell 14 cents to $67.62 a barrel Monday on the New York Mercantile Exchange. March Brent crude on London's ICE Futures exchange dropped 29 cents to $65.95 a barrel.
OPEC said Monday it had pegged the value of its reference basket of 11 crude oils at $60.22 a barrel Friday, up from $59.30 a barrel Thursday. The basket is now just $1.15 a barrel off its record of $61.37 a barrel, reached Sept. 2 in the aftermath of hurricanes along the U.S. Gulf Coast.
OPEC devised a new basket after members complained the old basket overstated the value of the group's output.
Besides Iran, worries include instability in Nigeria, the world's eighth-largest oil producer.
Attacks on platforms and pipelines in the oil-rich Niger Delta over the past month have killed dozens of soldiers and civilians and cut 10 percent of the nation's daily oil output.
On Monday, the Nigerian government said four kidnapped Royal Dutch Shell workers had been freed. The oil workers were captured by armed gunmen at a Shell offshore oil rig on Jan. 11.