OPEC to Keep Oil Output High, in Spite of Iran's Efforts

VIENNA – OPEC sealed a deal to keep oil output near maximum levels to tame prices on Tuesday but delegates said Iran, locked in a dispute over its atomic program, made an 11th hour bid to secure a cut.

OPEC, provider of over a third of the world's oil, will keep its production limit near a 25-year high of 28 million barrels per day (bpd) with prices approaching $70 and worries over supplies from Iran, Nigeria and Russia.

Ministers emerging from the meeting insisted the decision was unanimous and there were no divisions during the talks. Iranian Oil Minister Kazem Vaziri denied seeking a cut.

Iran's argument with the United Nations' nuclear watchdog over its atomic program has dominated this OPEC meeting and raised the possibility of a disruption to supplies from OPEC's second biggest producer. Vaziri sought to reassure.

"We are not mixing politics with the economic decisions on this issue. We are not mixing oil with politics," he told reporters. "Iran will not stop exports."

He was speaking hours after the five permanent members of the United Nations Security Council agreed in London that the U.N.'s International Atomic Energy Agency should report to the Council this week on what Iran must do to cooperate.

The oil minister of fellow OPEC member Libya said any move to refer Iran to the Security Council would have a "very big effect" and send prices higher still.

Iran says it wants to use nuclear energy to produce electricity, but the United States and its European allies have doubts. OPEC member Venezuela, a big supplier of oil to the United States, has said it will support Iran.

Forecasts for lower energy demand in spring were pushed from the table as OPEC ministers grappled with the impact of political events beyond their control. Consumer nations are worried that high oil prices will harm their economies.

"They're supplying the market the best they can, but they have very little impact on global refinery capacity and very little impact on geopolitical events," said Jason Schenker, an analyst at U.S. bank Wachovia.

The oil minister of the world's biggest oil exporter Saudi Arabia said in remarks published on Tuesday that oil prices between $50 and $60 a barrel would be "satisfactory to all," but fluctuations between $50 and $70 were detrimental.

Algerian Energy and Mining Minister Chakib Khelil said OPEC was prepared to risk a rapid build in oil stocks.

"We are taking a chance and I think it is worth it because we don't really want to hurt the world economy," he said.

The cost of a barrel of oil has more than doubled in a two year rally fuelled by demand from the United States and the rapidly growing economies of China and India.

Supply worries have added impetus.

Attacks on OPEC country Nigeria's oil industry have cut deep into its exports. And once reliable energy supplier Russia has twice turned down its gas exports this year.

OPEC has been producing close to 30 million bpd for months but prices remain at their highest level in real terms for a quarter of a century. On Tuesday, U.S. crude stood at $68.

OPEC's own economists forecast that demand in the world's 85 million barrels per day oil market will drop by two million bpd in the second quarter when peak winter consumption has passed.

Analysts pegged OPEC output at 28.23 million bpd in December. Including Iraq, which stands outside the group limit, production was 29.81 million bpd, according to a Reuters survey.