December 4, 2003	Thursday	Shawwal 9, 1424

VIENNA, Dec 3: Consensus was forming among Opec members that they would maintain the cartel’s oil production ceiling when they meet here on Thursday but may need to cut it in early 2004 to deal with lower demand.

Seven members of the cartel, including Opec kingpin Saudi-Arabia, have signalled that they saw no need to change the ceiling of 24.5 million barrels per day (bpd) that went into effect on November 1, as prices were satisfactory.

“The current prices are right,” Saudi Arabian Oil Minister Ali Al-Nuaimi told reporters after arriving in Vienna for Thursday’s meeting of the 11-member Organization for Petroleum Exporting Countries.

“The dollar is weakening, the purchasing power is quite weak, so the price is OK. The market is in balance now, we have to be very careful what happens in the next few months,” al-Nuaimi said.

Asked whether there could be a production cut early next year, he replied: “Yes, there is a high possibility.”

His remarks echoed that of his United Arab Emirates counterpart, Obeid bin Saif al-Nasseri, who said: “We don’t have strong reasons for changing the ceiling” but added that the “second quarter is a big concern” for Opec.

The oil ministers of Algeria, Indonesia, Iran, Libya, and Venezuela have all said they want to keep the status quo, but most have mooted another meeting between January and March next year to review the market situation.

“I don’t think there is a need for a change in quotas... we probably have to meet again before March,” Libyan Oil Minister Abdulhafid Zlitni said.

Algeria has said Opec should contemplate lower production only in the second quarter, as seasonal demand decreases and output from oil producing countries from outside the cartel is expected to rise.

Algerian Energy Minister Chakib Khelil expected demand in the second quarter to be lower by 1.5 million bpd from its current level, and non-Opec crude oil production to increase by more than one million bpd.

But he stopped short from predicting an Opec cut in production in the second quarter.

“I don’t know, we should see how much we are producing first,” he said here.

Oil prices since June have stayed close to the upper limit of the $22-28 per barrel price band targeted by Opec, and often hovered above it, with demand now driven by the winter season in the northern hemisphere and rapid economic growth in the United States and China.

Prices on Wednesday held on to the bulk of recent gains despite the emerging consensus in Vienna to resist any immediate reduction in quotas.

A decision on Thursday to maintain output would run against the wishes of the International Energy Agency (IEA), which represents consumer nations. This body has been calling for an increase in supply.

But Opec officials have argued that high prices have been caused by political worries, mainly linked to Iraq, and not to a lack in supply.

On the administrative front, the cartel which controls about one third of the world’s crude oil supply, has yet to agree on a name to fill the top administrative job at the organization’s headquarters in the Austrian capital.

Iran, Kuwait and Venezuela have fielded candidates, respectively Hadi Nejad Hosseinian; Adnan Shihab-Eldin, who is Opec’s director of research; and Alvaro Silva Calderon, the incumbent secretary general.

Iran has said it would stand by its candidate and not give support for any other country’s aspirant.

Industry sources said if the cartel fails to reach a consensus, it could resort to alphabetical order, and in this case Iran would emerge as winner.

Another way out would be to ask the oil minister of the country which will take over the presidency in 2004, Indonesia, to serve as the acting secretary general until an agreement is reached.—AFP