OPEC readied extra production yesterday to stave off a spike in oil prices threatened by a strike in Venezuela and a possible war in Iraq.
OPEC is set to respond with a temporary production hike to fill the Venezulean gap in bid to bring prices down.
Leading cartel producer Saudi Arabia, in control of most of the world's spare output capacity, said it was already pumping more to fill the 2 million barrels a day hole on world markets.
"There is no shortage. We never allowed a shortage to take place," Saudi Arabian Oil Minister Ali al-Nuaimi told reporters before yesterday's emergency OPEC meeting.
Asked if OPEC was supplying the market with all the oil it needed, he said: "Yes, we want to make sure there is no shortage."
Riyadh is trying to prevent oil spiking to heights that might harm world economic growth and hit crude demand. US oil prices recently rose above US$33 a barrel for the first time in two years. It was valued at US$31.58 on Friday.
Naimi said Riyadh could open the taps to 10 million bpd at just two weeks notice, some 2 million bpd higher than estimated Saudi output in December.
"We can get to 10.5 [million bpd] right away but to maintain that level we need 90 days to formalize contracts for extra rigs with drilling companies," he added of the kingdom's full capacity.
Fellow cartel members the UAE, Kuwait, Nigeria and Algeria also held spare capacity, the minister said.
Naimi ruled out any increase at yesterday's meeting in formal limits of 23 million bpd for the 10 OPEC-member countries with quotas, because Venezuela is out of the market.
"At the December meeting we evaluated the market needed 23 million barrels per day. The ceiling is still 23 million barrels a day and we will maintain 23 million barrels a day," he said.
* Oil prices in New York recently rose above US$33 a barrel for the first time in two years.
* Crude oil was valued at US$31.58 on Friday.
* Ministers from Kuwait and the UAE have said preliminary discussions have focused on a 1.25 million bpd increase.
* OPEC members in December decided that the market needed 23 million bpd. The market is now falling about 2 million bpd short of that mark.
That means the group will now discuss the size of a temporary increase and make clear they intend to reverse the addition once Venezuelan deliveries are restored.
With no end in sight for the strike, that could be some time. Venezuelan oil officials in Vienna for the meeting blamed sabotage at oilfields, refineries and computer systems for the prevention of any swift return to production.
Ministers from Kuwait and the UAE have said preliminary discussions have focused on a 1.25 million bpd increase.
Naimi would not comment directly on that volume. But he said that with a Venezuelan outage of 2 million bpd, an increase of 1.5 million bpd would not even be enough.
Some delegates said that OPEC ministers might decide simply to make clear their intention to make up for the Venezuelan loss without announcing any exact additional volume increase, or individual allocations.