Opec Wary Of Plan To Let Iraq Sell Oil Decision Could Drive Down Current High Crude Prices

OPEC ministers tried Tuesday to play down any threat to recent high prices as they faced speculation that Iraq could soon be back in the oil market after a six-year absence.

But analysts suggested Iraq’s return could lower prices and give consumers a break after the recent run-up in fuel costs.

“I think it’s serious,” said John Lichtblau, chairman of the Petroleum Industry Research Foundation, based in New York. “It looks more real than it has in the past.”

Two days before OPEC oil ministers begin their winter meeting here, Iraq said Monday it resolved objections to an oil-for-food deal with the United Nations. But OPEC ministers and other analysts noted that a deal wasn’t firm.

Iraq’s return to the oil market could pose a problem for the Organization of the Petroleum Exporting Countries, whose members have been exceeding their production quotas and now could soon be faced with added supplies.

But OPEC ministers as they have for some time - predicted Iraq can re-enter the market with no major problems because demand is strong and major industrial countries are heading into winter with low stockpiles.

Qatari oil minister Abdullah bin Hamad al-Attiyah said Iraqi supplies can easily be absorbed, while Venezuela’s oil minister Erwin Arrieta noted that there was no solid U.N.-Iraq agreement.

The ministers did not publicly address a key concern: OPEC is exceeding its production ceiling by about 1 million barrels a day even without Iraqi exports and once Iraq is back, somebody will have to cut production to prop up the price.

Iraq was banned from selling oil right after it invaded fellow OPEC member Kuwait in August 1990, but its past efforts to re-enter the market have come up short.

Prices for OPEC oil have hovered between $22 and $23 a barrel. But Iraqi exports could push the price back under OPEC’s target of $21 per barrel, Lichtblau said.