Sept. 24 (Bloomberg) -- OPEC, supplier of a third of the world's oil, is planning to maintain output quotas through the end of the year as sabotage limits Iraqi exports and demand rises because of winter from the U.S. to Japan, officials said. The group meets today in Vienna. Ministers from Saudi Arabia, Iran, Kuwait, the United Arab Emirates, Algeria, Venezuela and Indonesia have signaled they won't cut output now because prices are in the target range of $22 to $28 a barrel. ``OPEC has no immediate need to act,'' said Chris Brown, director of energy consulting at Wood Mackenzie Consultants Ltd. in London. ``We could see a cut in the next two months depending on how more Iraqi oil comes on line. The last thing OPEC wants is a glut forming.'' Crude oil in London has averaged $28.29 a barrel in 2003, $10 more than the 1990s average, boosting income within the Organization of Petroleum Exporting Countries and profit at oil companies such as BP and Exxon Mobil Corp. Prices may fall in 2004 as Iraqi exports and rising output in Russia overwhelm demand, according to a Bloomberg News survey.
Iraqi Oil Minister Ibrahim Mohammad Bahr al-Ulum traveled to Vienna for the gathering, where Venezuela initially objected to the country's participation in the formal meeting. The minister was appointed with the help of the U.S.-led authority in Baghdad, and Iraq's interim government has yet to be recognized by the United Nations. The Venezuelan minister, Rafael Ramirez, today said Iraq will participate as a full member. Informal talks among all ministers were scheduled for 11 a.m. in Vienna, with the formal meeting later.
Concern
Concern is mounting in OPEC that prices will decline in 2004, and Algerian and Kuwaiti officials said OPEC may have to assemble again in December. Oil prices have dropped 15 percent in the past month for OPEC's benchmark, to $24.82 a barrel. OPEC, excluding Iraq, agrees to set quotas to keep the price of its oil index between $22 and $28 a barrel. The index was unchanged Monday at $24.82 a barrel. ``We are very worried about the prices, especially these days, with prices not very good,'' Kuwaiti Oil Minister Sheikh Ahmad Fahd al-Ahmad al-Sabah told reporters in Vienna yesterday as he arrived. ``Everybody thinks 2004 will be a bad year, especially the first and second quarters of the year.'' Ministers maintained quotas at their last two meetings, held in June and July amid expectations OPEC would need to reduce supply to make room for Iraq. Prices rose this year because a strike in Venezuela, political violence in Nigeria and the war in Iraq disrupted supply, while a colder-than-usual winter and growth in China propped up demand. Oil consumption in the fourth quarter rises to its annual peak, because of the Northern Hemisphere winter. While sabotage and power failures in Iraq have delayed a recovery in the nation's production, output reached 1.28 million barrels a day last month, up from 850,000 in July. The nation, holder of the second-largest oil reserves, wants to reach the prewar rate of 2.5 million daily next year.
Quota Allocations
Outside Iraq, OPEC production has already declined since its peak in May. OPEC pumped 25.78 million barrels a day in August, 750,000 barrels a day less than in May, according to Bloomberg estimates. The group targets output of 25.4 million barrels a day for members excluding Iraq, a quota in place since June 1. Iraq hasn't had an OPEC quota since the 1990-1991 Gulf War and isn't likely to get one soon. Thamir Ghadhban, the chief executive of Iraq's oil ministry, said this month Iraq won't accept a quota until supply reaches 3.5 million barrels day. Also on OPEC's agenda this week will be proposals for reallocating production among members. Algeria, Nigeria and Libya want a greater share of OPEC's production to reflect their expanding oil industries. Ministers will also discuss electing a new secretary-general because Alvaro Silva's term ends this year. Silva, a Venezuelan, is standing for re-election, against two declared candidates, Adnan Shihab-Eldin of Kuwait and Hadi Nejad-Hosseinian of Iran. //www.bloomberg.com