OPEC to keep brake on supply as Iraq restart looms VIENNA, (Reuters): OPEC YESTERDAY prepared to maintain oil supply limits in a bid to keep prices afloat as the prospects improved for an early resumption of UN supervised Iraqi exports. Ministers from the Organisation of the Petroleum Exporting Countries, meeting yesterday, said they saw no need to lift output despite the absence of Iraq's supplies for the past month. "We're going to roll over. There's already too much oil on the market. We will just keep policy as it is," said OPEC President Chakib Khelil. "I think this is consensus from all members of OPEC," said Qatari Oil Minister Abdullah al-Attiyah. Today's OPEC talks are timed to coincide with a United Nations vote on Iraq that will determine the fate for months to come of Baghdad's sales under the UN's oil-for-food programme. UN envoys said that, in the face of Russian opposition, the US and Britain had abandoned a vote on the reforms that aimed to overhaul the 11-year-old Gulf War embargo against Iraq. Baghdad suspended oil deliveries in early June in protest at the plans. Diplomats said that instead, existing sanctions measures, including the oil-for-food programme, would be renewed for another five months. That would appear to meet Iraq's conditions for a resumption of oil sales, though the diplomats said negotiations on a sanctions overhaul would continue in coming months. "If the UN agrees a straightforward rollover without any elements of the US-British proposals then the Iraqi government would seriously consider restarting exports," an Iraqi oil official in Vienna said. Oil prices tumbled sharply as dealers took the view that Iraq would resume deliveries soon. London Brent crude futures ended down US$0.44 at US$25.65 a barrel. Previously expecting to compensate for the Iraqi stoppage, OPEC now finds it has no option but to maintain production unchanged in defence of its US$25 a barrel price target. A basket of cartel crudes, that trades at a discount to Brent, was valued on Friday at US$24.44 a barrel. Ministers have become increasingly concerned that the US economic slowdown has curtailed demand for OPEC oil. "The United States economy has weakened further and the European economy is growing at a weaker rate so consequently demand will be much lower," said OPEC President Chakib Khelil. Inventory data has shown surprisingly strong stockbuilds and the latest four-week oil demand figures for the United States showed a worrying four percent year-on-year decline. While most producers appear more worried about the potential for more downside price risk, leading producer Saudi Arabia is just as concerned to avoid a repeat of last year's price spike. Riyadh is sensitive to accusations that it allowed prices to get out of hand last autumn by failing to turn up the taps quickly enough, contributing to this year's economic downturn. Even if Iraq keeps its oil off the market, OPEC ministers look sure to rule out another extraordinary meeting before their next scheduled gathering on September 26-27. OPEC sources said that if more oil is needed before the end-September conference then it can be triggered by agreement over the telephone. "The question is, will they be able to time any increase to prevent a price spike," said analyst Yasser Elguindi of Medley Global Advisors.
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