When OPEC oil ministers last met to review their production quotas for crude, some feared that exports from a resurgent Iraq would soon undermine the high prices they were then enjoying.
One month later, as its ministers gather once again, OPEC can afford to relax.
Chronic looting and sabotage have hampered Iraq's efforts to ramp up oil exports and exploit its crude reserves, which rank second in size only to those of Saudi Arabia. The longer Iraq takes to restore its once-mighty oil industry, the longer its fellow cartel members can put off cutting their own output to make way for fresh Iraqi barrels.
Demand for oil remains strong, with the US and other major importers running down their inventories and the peak summer driving season shifting into top gear. The price for OPEC's benchmark crude has been stuck at or near US$28 a barrel -- the top end of the group's desired price range.
Given such conditions, OPEC representatives meeting Thursday in Vienna, Austria, will feel little need to tinker with output, oil analysts say.
"At these sort of numbers, they must be quietly rubbing their hands," said Rob Laughlin, managing director of London brokerage GNI Man Financial.
OPEC supplies about a third of the world's crude. The group agreed at its meeting last month to leave its production ceiling unchanged at 25.4 million barrels a day.
Saudi Arabian Oil Minister Ali Naimi, seeking to reassure consumers, insisted that oil prices "are not high," in an interview Thursday with the London-based Arabic daily Al-Hayat.
"Even if we do not change the production ceiling, it is important to meet to review the market situation and developments and to hear the views of the 10 ministers regarding the developments in the markets," Naimi explained.
The United Arab Emirates' top oil minister, Obaid bin Saif al-Nasseri, Sunday said that there are no "convincing reasons" to change the current ceiling.
The big issue, as always, will be Iraq.
Although Iraq is a founding member of OPEC, it hasn't participated in OPEC's quota agreements since former president Saddam Hussein invaded Kuwait in 1990. Iraq's erratic exports under the UN oil-for-food program made it the cartel's biggest wild card. Iraq stopped pumping crude altogether during the US-led invasion, and it only just started offering long-term supply contracts last week.
In anticipation of an early resumption of Iraqi exports, other OPEC members began this spring to rein in excess production and stick more closely to their agreed quotas. Led by Saudi Arabia, they trimmed their excess output by 1 million barrels a day in May and an additional 250,000 barrels last month, Laughlin said.
"It's still not looking like OPEC needs to get worried about a major return of Iraqi oil to the market," said John Waterlow of Wood Mackenzie Consultants in Edinburgh, Scotland.
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