Opec: No Plans to Raise Oil Production

Opec, the oil cartel, today said that it has no plans to raise output as the US launched air strikes against Saddam Hussein.

Officials from the cartel said that there was no need for such a move as oil prices have dropped to a three-month low. London's benchmark Brent crude oil fell to $25.5 a barrel overnight as traders expected a quick end to the one-sided war.

A week ago, a barrel of Brent crude was trading at $33.7 as stock markets around the world fell sharply on diplomatic wrangling between UN security council members.

"No. We are not thinking of any increase in production," Abdullah al-Attiyah, the Opec president and oil minister of Qatar, told Reuters. "Oil prices are heading downwards. This shows there is more oil in the market than the market can absorb."

Mr Attiyah said that the producer group was keeping in close contact with non-Opec producers and the Paris-based International Energy Agency (IEA), which oversees consumer stocks in 26 industrialised nations.

"We are watching the situation very closely and the market is not giving any signal of a shortage," he said. "We are in close consultation with the IEA and non-Opec members ... we are prepared to take steps to stabilise the price as well as supply and demand in the market."

Iraqi exports have ground to a virtual halt this week after the UN evacuated its staff overseeing Baghdad's oil-for-food programme. Saudi Arabia, the world's leading oil exporter, has already raised production well beyond 9m barrels daily - its allowed Opec quota is 8m - in part to cover shortages from strike-hit Venezuela.

Saudi Arabia and the rest of Opec have pledged to cover any shortages caused by the US-led campaign against Iraq. But Opec has little desire to raise output with prices so low. The oil cartel has tried to keep prices within a price range of $22 to $28, with varying degrees of success. Opec's big fear is that prices will crash as they did after the end of the 1991 Gulf war.