LONDON: Four years into an oil price boom sceptics said would never last, Opec cartel ministers gather next week aiming once more to fend off the threat of lower prices.

As Iraq attends its first Opec meeting since the US-led invasion in March, analysts warn that rising Iraqi supply and a bulge in Russian production growth next year means high-flying prices will be hard pressed to defy gravity again.

“Opec’s high price strategy can work for a while but if Iraq’s exports recover, mid-2004 will present a tough market for Opec to manage,” said Adam Sieminski of Deutsche Bank in London.

Opec ministers meet in Vienna on September 24, buoyed by another bumper year of oil revenues after the slower-than-expected recovery in Iraq’s post-war production prevented industrialised nations from rebuilding fuel stocks.

With oil prices bubbling near the $25 a barrel mid-point of Opec’s target range, several ministers have said the group is unlikely to change a 25.4 million barrels per day (bpd) production ceiling in place since June.

Even so a 14 per cent price slide so far this month — giving a fillip to a sluggish global economy — means the cartel which controls over half of world oil exports will be nervously calculating when to cut back before a glut builds.

Unless politics again intervenes to upset oil supply, as it did this year in Opec members Venezuela, Nigeria and Iraq, the cartel’s ability to stick within proscribed quotas faces a sterner test in 2004.

Iraq could rise back to pre-war production capacity of 2.8 million bpd by next March, providing it can contain acts of sabotage on its northern export pipeline that have kept production at half that level since the war.

Baghdad’s expansion plans from there will make regional rivals Saudi Arabia and Iran reluctant to cede more market share by cutting back.

Opec’s two largest producers are already looking nervously over their shoulders at rising rival production from non-Opec states of the former Soviet Union, where western oil firms are falling over themselves to buy up bargain oil assets. US oil officials head to Russia to plan the next step just two days before Opec meets.

“Later in the year cooperation with non-Opec is going to become an issue for Opec and the focus is going to be Russia,” said George Beranek of Petroleum Finance Company in Washington D.C.

Slow fuel demand growth in a patchy world economy also threatens Opec’s ability to pilot a soft price landing.

And growing Opec producers like Nigeria and Algeria will not want to leave costly new facilities, pushing output capacity well above existing quotas, sitting idle for long. Opec is likely to defer a decision on requests for higher quotas until Iraq’s supply is more settled and Baghdad is reincorporated into cartel quotas.—Reuters