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OPEC President Says Output Cuts May Be Needed

Quotas should decline by year-end if Iraq meets its lowered production target, official says.

June 24, 2003|From Bloomberg News

OPEC should cut oil production by the end of the year if Iraq meets its revised oil-output target, the group's president, Abdullah ibn Hamad al Attiyah, said Monday.

Iraq has lowered its year-end production target by a fifth to 2 million barrels a day, Thamir Ghadhban, the U.S.-appointed chief executive of Iraq's oil ministry, said Saturday. The ministry shut down in March at the start of the U.S.-led invasion.

The 11-member Organization of the Petroleum Exporting Countries, which pumps about a third of the world's oil, left production quotas unchanged at its June 11 meeting. The producers' next meeting is set for July 31.

"OPEC should cut production to accommodate the Iraqi oil" so world oil markets will be in "balance" if Iraq meets its target, Attiyah said in Washington.

Iraq's output target was cut because the nation's oil facilities are not getting enough electricity to power their equipment, Ghadhban said at a meeting of business and political leaders in Jordan, organized by the World Economic Forum. Attiyah met with Ghadhban on Sunday.

During February, the last full month before the March 20 invasion, Iraq produced 2.5 million barrels a day and exported 1.7 million, according to Bloomberg estimates. Iraq resumed crude oil exports Sunday after a three-month lull.

Ghadhban said Iraq now is producing about 800,000 barrels of oil a day.

"We believe that Iraq will come to the market sooner or later, so OPEC should study it very carefully and be ready for this," said Attiyah, who is in the United States for meetings with Energy Secretary Spencer Abraham and oil company representatives.

The market also is signaling that a production cut may be needed, Attiyah said. Buyers of Qatari crude are no longer seeking extra oil under their long-term contracts, he said.

"We received a signal from the suppliers," said Attiyah, who also is Qatar's oil minister. Buyers "are giving us a signal that they don't need more oil and they don't believe that the market can absorb this oil."

Oil traders shrugged off Attiyah's comments. Crude fell 31 cents to $29.17 a barrel on the New York Mercantile Exchange as the new August contract began trading.

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