MercoPress. South Atlantic News Agency

OPEC set to keep production up

Major oil-producing countries are set to keep crude output unchanged at an OPEC meeting today despite Venezuela's calls for cutting production, while some cartel members hinted at the possibility of trimming supplies down the road.

Qatar's oil minister, Abdullah al-Attiyah, said Wednesday he did not believe output should be changed now but left open the possibility of cutting production later this year.

??There is no evidence why we should cut while the price is US$72,'' the per-barrel amount a day earlier, al-Attiyah said.

But he said OPEC will be watching the situation between now and its next meeting in September, and could then change course: ??We will see.''

Venezuelan Oil Minister Rafael Ramirez said reducing output now is justified because global markets are well supplied, adding that uncertainty over US actions against Iran and the war in Iraq were prime causes of today's high oil prices. Ramirez said OPEC should consider a cut but that ??we don't want to introduce elements that are going to be contributing to instability.''

While many members of the Organization of Petroleum Exporting Countries agree that geopolitical instability ? as well as refinery bottlenecks and investor speculation ? plays a major role in pushing energy costs higher, they nevertheless do not want to risk exacerbating the situation by cutting output.

The political backlash would likely be considerable and, economically speaking, the move could backfire against OPEC if higher prices led to reduced demand, analysts said.

??There has been talk of a cut for months now, which typically tends to be pushed back to the next meeting, over and over again,'' said Antoine Halff, director of global energy at Fimat USA in New York.

??This meeting is more about Venezuelan politics than it is about OPEC policy,'' said Halff, citing comments made Wednesday by Ecuador ? just one day after Venezuelan President Hugo Chavez paid a visit ? that it is considering rejoining OPEC. While this would not significantly shift OPEC's center of gravity away from the Middle East, it might still be seen as a victory for Chavez as an international statesman. Ramirez said he would welcome Ecuador ? and Sudan too ? into the group.

Meantime, OPEC members are divided on which direction they see oil prices heading. The head of Libya's oil policy, Shokri Ghanim, said he expects that crude futures, now hovering above US$70 a barrel, will rise.

??There are so many factors like geopolitics and speculation, so there is no reason why prices won't go up,'' Ghanim said.

But Iranian Oil Minister Kazem Vaziri Hamaneh said high levels of oil inventories around the world could create downward pressure on prices and he dismissed concerns that crude prices were becoming a drag on the world economy. Crude ??stocks are beyond demand, and this is creating concerns in the months ahead,'' Vaziri said, hinting that he might support an output cut down the line.

Yasser Elguindi, senior managing director at Medley Global Advisors in New York, said just beneath the surface of OPEC's accomodative stance is the fear of being caught off guard in the second half of the year if weaker economic growth cuts into oil demand or if improved diplomatic relations between the West and Iran helps ease the so-called fear premium in the price of crude.