OPEC, which pumps a third of the world's oil, will probably reduce oil production from a 1 and a half year high to bolster prices as demand slows and concern wanes Iraq's industry will be ravaged by war, analysts said.
Crude oil in London has plunged 28 percent since March 7 to less than US$25 a barrel as Saudi Arabia and other OPEC countries cheated on their quotas to avert shortages. That crude is flooding the market as demand slows with the end of the Northern Hemisphere winter.
OPEC President Abdullah Bin Hamad al-Attiyah is planning a meeting for April 24 with the rest of the group to consider cutting supplies. Members are pumping 1.57 million barrels a day more than targeted, enough to supply Spain, and need to curtail that excess, analysts said.
"What OPEC will have to do is go back to the quota," said Leo Drollas, deputy executive director of the Centre for Global Energy Studies in London, a consulting company founded by former Saudi oil minister Sheikh Zaki Yamani.
Benchmark crude oil prices have rebounded since the OPEC president said on Monday the group may meet two months before the scheduled June 11 gathering in Doha, Qatar. Crude oil for May delivery on the New York Mercantile Exchange today rose as much as 1.4 percent to US$28.40 a barrel and traded at US$28.34 a barrel at 11:48am Singapore time. Yesterday, it closed 0.1 percent higher.
Most OPEC members are ignoring their output limit, designed to keep the group's oil price at about US$25 a barrel. The Organization of Petroleum Exporting Countries agrees to cap supplies to keep prices high, though has no mechanism to enforce its decisions.
Today in Paris, four OPEC officials are scheduled to gather for an annual industry conference. Among the scheduled attendees are al-Attiyah, OPEC Secretary-General Alvaro Silva, Nigeria's Rilwanu Lukman and Algerian Oil Minister Chakib Khelil.
US-led forces are in Baghdad and tightening control of Iraq, bringing closer a return of the country's oil exports.
British forces control most of Basra, the second-largest city, allied military officials have said.
An end to the conflict in Iraq may cause prices to drop below US$22 a barrel, the lower end of OPEC's target range, as world output climbs, said Ali Rodriguez, head of Venezuela's state oil company and OPEC's previous secretary-general, earlier this week.
OPEC is seeking prices at US$25 a barrel, al-Attiyah said on Monday. OPEC's oil price, an index of seven crude oils, slipped below that mark on Monday for the first time since last November, trading at US$24.91.
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