MercoPress. South Atlantic News Agency

OPEC expected to maintain current output levels

Venezuela's oil minister on Monday called for the Organization of Petroleum Exporting Countries, which meets Thursday in Caracas, to consider cutting oil production. However his counterpart in the United Arab Emirates said he expects the cartel to maintain current output levels.

The 141 OPEC meeting will be preceded Wednesday by the Ministerial Monitoring Subcommittee with delegates from Iran, Kuwait and Nigeria.

"There is a consensus that the market is well supplied, and the levels of oil inventory are above historic averages" Oil Minister Rafael Ramirez told reporters.

Asked if that meant Venezuela thought OPEC countries should maintain output at current levels, he answered: "At least maintain it." But he then added, "If we were to base it on the fundamentals of the market, we should propose a production cut."

The United Arab Emirates' oil minister, Mohamed al-Hamili, said he expects OPEC to take a decision to maintain production levels at its forthcoming meeting because there is no shortage of supply of crude oil on the market, the official Emirates news agency reported. In April, OPEC pumped 29.8 million barrels per day.

Al-Hamili also said he expects demand for oil to grow in 2006 at the same rate as in 2005 because reports show global economic growth is going be the same as last year.

According to UAE Oil minister a fair price of oil for both producers and consumers is 50 to 60 US dollars a barrel.

OPEC's spare output capacity stands at two million barrels a day and so the reason behind high oil prices is not a lack of supply but geopolitics and speculation on futures markets in addition to a shortage of refining capacity, al-Hamili added.

Ramirez said high oil prices were largely due to the impasse over Iran's nuclear program. "Prices are not responding to the fundamentals of the market".

Venezuela has been one of OPEC's strongest price hawks, consistently arguing to control oil production to defend high prices.

Although demand and supply seem to be approaching an equilibrium point, markets remain concerned with the volatile situation not only with Iran and Iraq, but also in Nigeria with armed groups attacking pipelines and in Latinamerica undergoing a nationalistic rash.