OSAKA, Sept 16: Opec ministers who are to convene here on Thursday are divided on whether the time has come to boost oil production in order to send a reassuring signal to world markets.

Despite pressure from consuming countries, anxious about supplies ahead of winter, and oil prices that have recently spiked close to an 18-month high of 30 dollars a barrel, several ministers have nonetheless argued that the market is over-stocked.

And they attribute the recent price rise a “war-risk premium” caused by mounting friction in the Middle East.

But US President George W. Bush, who last week suggested that a US attack on Iraq was not imminent, has taken some of the heat off the Organization of Petroleum Exporting Countries.

In debating policy for the fourth quarter of 2002, Opec ministers can now focus on market fundamentals rather than the likelihood of a destabilizing military campaign against Iraq, according to Pierre Terzian of Petrostrategies.

While producers such as Venezuela, Indonesia, Kuwait and Qatar are pushing for current output levels to be maintained, Opec heavyweight Saudi Arabia is backing a production increase as a means of relieving price pressures.

Frederic Lasserre, an analyst with Societe Generale Equity Research, said Opec needed to send a signal to the market that it will be accomodating in the event of increased price tensions.

He said Opec cannot allow prices to surge while adopting an ‘it doesn’t concern us’ attitude when it has a chance to calm such tensions.

Supporters of an Opec quota increase worry that with a current production level of 21.7 million barrels a day, which is said to be over-shot by 1.8 million barrels a day, the organization is running out of room to maneuver in the future.

To have sufficent maneuverability to reduce output in the future, Opec must at least legalize its excess production, even if it reduces quotas either this winter or well after an attack on Iraq when prices fall or if an attack does not take place or if demand should slump, Lasserre said.

Such a move, he added, would “indirectly” respond to pressures from Algeria and Nigeria for an increase in their individual quotas.

Lasserre therefore foresees an agreement to boost the current overall Opec production ceiling by one million barrels a day.

For Terzian of Petrostrategies, Opec is confronting a dilemma.

Limiting an overall increase to 700,000 to 800,000 barrels a day would avoid difficult decisions on distributing the quota among member countries, he added.

Terzian predicted a smooth meeting here this week, yielding no suprises.

It is inconceivable that Opec members would expose divisions among themselves just ahead of a meeting with importing countries, he said, referring to an internatial energy forum here September 21-23.

But Lasserre cautioned that the Opec dicussions could be long and complicated, since there is no consensus. —AFP