OPEC not to reduce output at March meeting, Iranian oil minister says

by The Associated Press

The Organization of Petroleum Exporting Countries will not reduce its output ceiling at its March meeting because the oil market is being driven by military and political tensions in the region, Iran's Oil Minister Bijan Zanganeh said Feb. 24.

“We won't reduce production given the existing situation, which is unusual because of the military and political situation in the region. The pressure on the oil market has nothing to do with fundamentals,” he told reporters on the sidelines of an industry conference in Tehran. Zanganeh said Iran did not receive a proposal for OPEC to suspend quotas if the U.S. leads a strike on Iraq.

“We will consider any proposals when (OPEC) gets together (in Vienna on March 11),” he said. Fellow OPEC members Saudi Arabia and Kuwait floated the proposal to mitigate the possibility of oil prices spiking in the event of a war on Iraq.

Zanganeh said the direction of global oil prices would depend on the duration of any war on Iraq, the extent of any damage inflicted on Iraqi oil facilities, and the possible spillover of any military action and tensions into neighboring countries.

Asked whether he still thinks a potential supply glut of 3 million to 4 million barrels a day could be triggered by the traditional drop in demand in the second quarter, Zanganeh said: “If we are to talk about the second quarter, with the arrival of Venezuela, we'll have the market excess.”

Oil production in Venezuela, once the fifth-largest exporter in the world, has been crippled by two months of strikes. OPEC plans to review its oil output ceiling of 24.5 million barrels a the March 11 meeting.