March 9, 2006	Thursday	Safar 8, 1427

VIENNA, March 8: Opec kept its oil output quota at a near 25-year high here on Wednesday, as major energy producer Iran blew hot and cold on whether it would halt crude exports if punished over its nuclear programme.

World oil prices dived under $60 per barrel on Wednesday following strong US energy stockpiles data and after Opec maintained its crude production quota, dealers said.

The Organization of the Petroleum Exporting Countries decided, as expected, to keep official production at 28.0 million barrels per day, according to a communiqué.

Opec normally tends to reduce its crude production during the second quarter in response to lower demand for heating fuel following the end of the northern hemisphere winter.

But in its communiqué following the latest one-day ministerial meeting, it said:

“Although all indicators show that the market is fundamentally well-supplied with crude oil... prices remain volatile, these being driven by geopolitical factors and associated concerns regarding potential future supply disruptions.”

It added that it had decided to maintain the current production ceiling “in order to contribute further to market stability and robust global economic growth, as well as maintain prices at levels reasonable to both producers and consumers”.

Opec was set to meet next in member-nation Venezuela on June 1, but some ministers have indicated that it could possibly gather in late April on the sidelines of the 10th International Energy Forum in Doha.

The cartel’s latest meeting had been dominated by concern over the potential impact on the market of Iran’s nuclear standoff with the West.

Speaking after Opec had maintained its output, Iranian Oil Minister Kazem Vaziri-Hamaneh gave assurances that his country would not halt its oil exports, even if hit by economic sanctions over its nuclear programme.

But a top Iranian security official, also speaking in Vienna, said Iran would have to “review” its policies in case the political environment changed.

“We will not use the oil weapon now because we don’t want to confront other countries,” Javad Vaidi told AFP on the sidelines of a meeting of the UN nuclear watchdog, the International Atomic Energy Agency.

“But if the situation changes, we will have to review our politics and adopt our policy.”

Oil minister Vaziri-Hamaneh later insisted: “Oil flow is continuing. The exports will not be stopped.”

Meanwhile the 11-member Opec, which produces 40.0 per cent of world crude, was holding its 140th official meeting on Wednesday.

“We are not interested in cutting production,” Saudi Arabian Oil Minister Ali al-Nuaimi told reporters after the Opec meeting.

“We hope we don’t have to” cut production this year added al-Nuaimi.

Among Opec’s members, only Venezuela had called publicly for a cut — of 500,000 barrels per day — at Wednesday’s meeting, arguing that the oil market was oversupplied.

The cartel is actually producing more than 29.0 million barrels of crude per day including output from Iraq, which is not included in the official quota.

“Crude is still flooding in despite supply disruptions,” Societe Generale analyst Deborah White said in London on Wednesday, adding that the extra oil was weighing on prices. OIL

PRICES PLUNGE: On Wednesday, New York’s main contract, light sweet crude for delivery in April, plummeted $2.03 to $59.55 per barrel in pit deals.

In London, the price of Brent North Sea crude for April delivery sank $1.67 to $59.50 per barrel in electronic trade.

News that US crude stocks stood near a seven-year high accelerated Wednesday’s retreat in prices.

Following the news, US crude had hit $59.25, while London Brent had struck $59.26 — their lowest points since February 17.

The US Department of Energy (DoE) reported on Wednesday that crude reserves rose by 6.8 million barrels to 335.1 million in the week to March 3. That was significantly above market forecasts of a rise of 1.5 million barrels.—AFP