Flush On $23-A-Barrel Oil, Opec Ministers Leave Well Enough Alone

VIENNA, Austria - Shrugging off Iraq's possible return to the oil market, OPEC ministers decided to keep their current oil-production levels to cash in on recent high prices.

Analysts said demand should keep OPEC oil prices above the group's target of $21 a barrel for now. But if Iraq actually starts selling oil again, after several failed attempts, the market could change quickly.

"Attention is now focused on the Iraqi barrels," said Leo Drollas, chief economist at the Center for Global Energy Studies, based in London. "We have to see when they come and how much it will be."

But ministers of the Organization of Petroleum Exporting Countries were upbeat. They wound up their two-day winter meeting yesterday, the first in years that took place while prices were high, and nobody did or said anything to spook traders.

Saudi Arabia's Ali Naimi, the most influential minister who controls nearly one-third of OPEC's production, summed up the mood in a word. "Excellent," he said with a grin.

OPEC ministers say demand for oil is strong enough to cushion any shock from Iraq's return. The United Nations banned Iraqi crude exports after President Saddam Hussein's invasion of Kuwait in August 1990, but a limited resumption is now being negotiated and Iraq has said it could be back in the market within weeks.

OPEC has exceeded its target price of $21 a barrel since September and now is getting between $22 and $23 a barrel. OPEC said it would continue its production ceiling of 25.033 million barrels a day. But analysts say cheating by some members has pushed the total to about 26 million barrels a day and the quota-busting must be addressed when Iraq comes back to avoid a price drop.

OPEC's secretary-general, Rilwanu Lukman of Nigeria, would not specify how much OPEC is producing. But he said Venezuela, identified by outside analysts as the biggest cheater, was not providing production figures to OPEC.

Venezuelan oil minister Erwin Arrieta was asked about reports that Venezuela plans to pump 3.25 million barrels of oil a day next year, nearly 900,000 barrels above its quota.

Arrieta said that number represents Venezuela's production capacity, not its planned production. But he did admit Venezuela was pumping about 2.48 million barrels a day. Its OPEC quota is 2.36 million barrels.

The recent high prices may have prevented cheating from becoming a major issue, at least for now.

"I don't think the little oversupply, or overproduction, is affecting prices," said oil minister Issa Mohammed al-Mazidi of Kuwait, one of the few OPEC members that is believed to be sticking to its quota.

OPEC members are: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.