by Stefan Smith
ISFAHAN, Iran - OPEC ministers were gathering in Iran Monday to decide on whether to maintain or increase its oil production ceiling, with cartel kingpin Saudi Arabia throwing its weight behind a hike.
"We have one proposal to start increasing by 500,000 (barrels per day) directy after our meeting" on Wednesday, Kuwaiti Energy Minister and OPEC President Sheikh Ahmad Fahd al-Sabah told reporters here.
"There is another proposal that we monitor the market and if there is need (for an increase) the president will communicate this and members can increase directly 400 or 500,000 (bpd)," he said, also citing the possibility that a decision could be the subject of an "extraordinary meeting" of the cartel at a later, unspecified date.
"The minimum of what we can do is to continue without any change and with our ceiling," he said, assuring that "it is not the right time to have any cut."
"What I can assure is that there is enough supply in the market," he said, adding that OPEC members had "about two million" bpd in spare capacity.
His comments came after top oil producer and OPEC heavyweight Saudi Arabia said it would push for an increase, amid record high crude prices and rising demand.
"World demand is forecast to grow in the last part of the year, which necessitates an increase in production," Saudi Arabia`s Oil Minister Ali al-Nuaimi was quoted as saying by the kingdom`s official SPA news agency.
He said the kingdom believed "there is a need to raise OPEC`s output ceiling by half a million bpd during OPEC`s upcoming meeting."
World oil prices slipped on the back of his comments: New York`s main contract, light sweet crude for delivery in April, dropped 31 cents to 54.12 dollars a barrel in electronic deals.
In London, the price of Brent North Sea crude oil for delivery in April lost 20 cents to 52.90 dollars a barrel.
Last week, concerns that strong global demand might outpace supply propelled the New York contract to with two cents of an all-time high of 55.67 reached last October.
The Organisation of Petroleum Exporting Countries (OPEC) had been expected to maintain its production ceiling at 27 million bpd.
For his part, Iranian Oil Minister Bijan Namdar Zanghaneh also said OPEC members would on Wednesday examine whether "to roll over and monitor the markets" or "increase the official level of production by 500,000 bpd."
"I prefer to discuss in the OPEC meeting and then decide," he said, when asked to spell out Iran`s position.
The Islamic republic, OPEC`s number-two crude exporter, has expressed its hostility to a hike, arguing the market was well supplied and blaming the markets.
"I think that no one has a problem with the current level of prices. Only some people are worried," Zanghaneh said.
"The market is confronted with overproduction. But the contradictions of the market -- overproduction on one side and from the other the high level of prices -- make any decision difficult," he said, putting February`s OPEC output at over 29 million bpd -- above the current production ceiling of 27 million.
Zanghaneh said OPEC was facing a "dilemma" at the meeting "because we have enough oil in the market and with this situation we have a high price. It is a problem for us, the fundamentals in this meeting."
He also cautioned that OPEC`s impact on prices was limited.
"We can only discuss about the level of OPEC`s production, not everything in the oil market. We prefer a stable price without fluctuation. Not low, and not high. We are comfortable between 30 to 40 dollars for the OPEC basket," he said, adding that over 50 dollars left the cartel "concerned".
Nuaimi also said current prices were not justified, "given the levels of demand and supply" and the fact that "current stockpiles are compatible with market requirements."
03/14/2005 15:30 GMT