Opec set to defer oil cuts as economy buoys price

Opec producers bolstered by an upbeat world economy gathered yesterday for a meeting this week that is expected to defer supply cuts as oil prices hold strong.

Opec's hopes of extending an oil price boom into a fifth straight year have brightened as economic growth picks up in oil importing giants China and the United States.

US crude is near $30 a barrel as major consuming nations head into winter. Oil ministers from Iran, Kuwait the United Arab Emirates and Indonesia have said prices are strong enough to let Opec leave a 24.5 million barrels per day (bpd) production ceiling in place.

"Politically it would be very difficult for them to cut at $30 oil," said Gary Ross of consultants PIRA Energy in New York.

Ministers have suggested that Opec could meet in January or February when they are expected to cut production for the second quarter as fuel demand declines following the northern winter.

Opec's September meeting agreed a shock 3.5 per cent production cut from November to counter rising supply from Russia and Iraq.

Delays in the post-war recovery of Iraq's oil exports have helped contain growth in oil inventories and held Opec's reference price above the top end of the cartel's $22-28 target range for most of the last two months.

Iraqi Oil Minister Ibrahim Bahr al-Uloum said yesterday that Iraq plans to raise oil exports to two million barrels a day by the end of the first quarter next year.

"We plan to export two million barrels a day by the end of the first quarter," Mr Uloum told Reuters on his arrival in Vienna.

Iraq exported just over 1.6 million barrels a day last month from its Gulf Basra export terminal in the south of the country and is planning to increase production from its southern fields.

Repeated sabotage has kept closed the country's northern export pipeline since the war.

Opec has scheduled talks to start at 1100 GMT (1200 local) tomorrow to discuss output policy.

Ministers will also discuss the election of a secretary-general. Current Secretary-General Alvaro Silva is standing again with two new candidates, Iran's former envoy to the United Nations Hadi Hosseinian and Kuwait's Opec chief economist Adnan Shihab-Eldin.