OPEC Head: We Won't Cut Production

OPEC's president confirmed Wednesday that the group will not change its production level amid the political instability and terrorism unnerving global markets.

Edmund Daukoru, Nigeria's oil minister and president of the Organization of Petroleum Exporting Countries, said output would remain unchanged, but the 11-nation cartel would monitor it closely between now and its next meeting in Caracas, Venezuela, on June 1.

OPEC, which pumps a third of the world's oil, has a current output quota of 28 million barrels a day. That target does not include Iraq, which adds an additional 1.5 million barrels.

"The oil market has remained well-supplied with crude," Daukoru said in his opening speech.

Saudi Oil Minister Ali Naimi said he hoped the group would not have to cut production at all this year, despite expectations of a slowdown in demand in the second quarter.

His Kuwaiti counterpart, Sheik Ahmed Fahd Al Ahmed Al Sabah, predicted that prices will drop below $60 a barrel by the end of June, but are likely to rebound to the $60 range in the fourth quarter. Al Sabah said he believes political turmoil and extremism have added $5 to $8 to each barrel.

Iran's minister of petroleum, Sayed Kazem Vaziri Hamaneh, deflected questions about Iran's statement to the International Atomic Energy Agency earlier Wednesday in which Tehran threatened the United States with "harm and pain." Asked by reporters about the statement, Hamaneh replied: "Ask the one who said that."

Hamaneh insisted that the Islamic republic would not cut back on or halt its oil exports. "So far there's no reason to reduce exports. Iran has no intention whatsoever of reducing its oil exports," he said.

The IAEA's 35-nation board has been reviewing Iran's nuclear activities, which prompted it to report the Tehran regime to the U.N. Security Council last month. Iran insists its nuclear program is peaceful and geared solely toward generating electricity; the United States and others contend it is covertly trying to make atomic weapons.

Oil ministers conceded that prices were uncomfortably high, but cautioned against lowering output at a time when extremists are attacking energy installations in Nigeria and the Middle East, and when the West is locked in a standoff with Iran over its nuclear program.

"Since the oil market now is controlled essentially by speculative forces, and speculative forces respond to events that may happen — rather than what happens — I think we have already seen the impact of the Iranian activity," said William Edwards, president of Houston-based Edwards Energy Consultants.

Many OPEC members repeatedly have said that prices are optimal in the $40-$50 range.

But they have hovered considerably higher for months: On Wednesday, light, sweet crude for April delivery was down 40 cents to $61.40 a barrel on the New York Mercantile Exchange. April Brent on the ICE Futures exchange fell 44 cents to $60.73 a barrel.

Venezuela's oil minister, Rafael Ramirez, abandoned his push to get OPEC to cut production by at least half a million barrels a day. The South American country is one of the group's most strident voices in favor of constraining output to keep prices high.

Ramirez has maintained that the market is oversupplied by at least 500,000 barrels a day, and contends the surplus will widen to as much as 2 million barrels a day if demand falls as expected in the second quarter. But with no public support from other members, he said he would make his case again in June.

Saudi Arabia has tightened security measures around its energy installations after the Feb. 24 bombing outside the gates of its Abqaiq facility, the world's largest oil-processing plant, Naimi said Wednesday.

"Naturally after something like, that security goes up. We have been taking additional measures," including the option of using surface-to-air missiles to thwart any airborne attacks and arming security forces with higher-powered weapons, Naimi said.

Recent attacks by militants on Nigerian pipelines and oil facilities have reduced the country's production by 455,000 barrels a day. Nigeria normally exports 2.5 million barrels daily.

Daukoru said the African nation was "committed to providing adequate security for operators in the (Niger) Delta." He said Nigeria planned to pump an additional 600,000 barrels a day by June.