LONDON -- OPEC has no plans to pump more oil to replace the crude Iraq is withholding from the market, reasoning that the recent spike in oil prices will ease once violence between Israel and the Palestinians abates, the group's top official said Wednesday.
OPEC Secretary-general Ali Rodriguez defended the decision to keep output steady until at least late June by insisting that global supplies were ''normal'' in relation to the physical demand for crude.
Oil prices seesawed on a day of conflicting market signals. Iran's oil minister reaffirmed that his country would not join Iraq in suspending its crude exports unless other Muslim countries also do the same.
However, the International Energy Agency warned that political uncertainties in the Middle East and labor strife in Venezuela still could upset the market.
May contracts of North Sea Brent crude rose 22 cents a barrel in London before slipping to $26.01, down 7 cents from Tuesday's close. In New York, contacts of light, sweet crude for May delivery rose 31 cents to close at $26.13 a barrel
''Twenty-six dollar Brent isn't a terrible, terrible number,'' said Peter Gignoux, head of the petroleum desk at Salomon Smith Barney. But he hastened to add: ''It's not a great number.''
The big question, Gignoux said, is how quickly other oil producers can replace the crude that Iraq has kept away from markets. Iraqi President Saddam Hussein suspended oil exports on Monday for 30 days or until Israel withdraws from the Palestinian territories.
Iraq, which has a daily production capacity of 2.5 million barrels, exports at least 1.8 million barrels a day under the close supervision of the United Nations. Iraq is OPEC's third-largest producer but doesn't participate in the group's production agreements.
Iran and Libya had earlier expressed support for the idea of using an embargo as a means of pressuring the United States to lean on Israel to end its military offensive against the Palestinians.
Libya has been quiet on the issue since Iraq began its boycott, but Iranian Oil Minister Bijan Zangeneh insisted that Iran would not act on its own to suspend its crude shipments. Iran is OPEC's second-largest producer after Saudi Arabia.
Zangeneh, speaking in Seoul, South Korea, said political tensions and speculation are driving the crude market and insisted there is no shortfall in global supplies.
Rodriguez said that Iran and Libya both had assured him they would not restrict output.
OPEC will stick to its current production ceiling of 21.7 million barrels a day until June 26, when oil ministers from the group's 11 member countries are to meet again, Rodriguez told reporters at OPEC's headquarters in Vienna, Austria.
''If we increased production, we could suffer a collapse of prices after the solution of the dramatic problems we're seeing in the Middle East,'' he said. ''Our hope is that the concrete conflicts between the Palestinians and Israel can be resolved as soon as possible.''
The IEA seemed to support Rodriguez's view that supply and demand were roughly in balance. The Paris-based group is the energy watchdog for the Organization for Economic Cooperation and Development, a group of rich oil-importing nations.
The agency noted in its monthly oil report that crude inventories for the world's biggest consuming countries were still above average, and that oil producing nations had a combined spare production capacity of 6 million barrels a day -- more than enough to cover the missing Iraqi deliveries. In addition, IEA member countries have about 4 billion barrels in strategic reserves to tap in an emergency.
Still, the IEA noted that the market was tightening, due partly to the unexpected speed of the U.S. economic recovery and to diminishing U.S. inventories of gasoline and other refined products.
© 2016. All Rights Reserved. | Contact Us