Iraqi Oil Minister Hussain al-Shahristani said on Saturday oil prices could not continue at such low levels and that Opec may look into an output cut at the groups next meeting in Vienna. "Oil prices cannot continue at these low levels. The oil market has slowly and gradually picked up in the last two months. We hope it will continue," Shahristani told reporters in the Jordanian capital, Amman.
-- Opec may look into output cut at next meeting in Vienna
-- Iraq has started plan to boost oil output
"Opec producers might look into an oil cut in Vienna if theres a surplus with no demand," he said. Some members of the Organisation of the Petroleum Exporting Countries have already raised the prospect that it may cut its oil output further to boost oil prices at a March 15 meeting.
Opec has agreed to lower its production by a total of 4.2 million bpd, about 5 percent of daily world demand, since last September to bolster prices and counter declining consumption. Oil settled more than 4 percent higher on Friday as expectations that Opec could reduce output again outweighed weak US economic data.
US crude settled at $45.52 a barrel, while London Brent crude settled at $44.85. "So far the quantities of production are more than demand. Theres a big drop in demand and so when the present production is more than the supply there is no choice but to reduce production," Shahristani said. "When Opec looks into output cuts, this is not to embarrass the market."
Shahristani added that non-Opec producers needed an oil price of $70 to be able to continue production. "Below $70 would mean that many of the oil fields outside Opec would stop production because they cannot produce at a loss," he said. On Iraq, Shahristani said the countrys oil production had been restored to 2.4 million bpd after a problem at a de-gassing station was resolved.
Of the 2.4 million barrels, 1.9 million barrels per day went to exports and 500,000 bpd were for local consumption. Shahristani said Iraq had started an acceleration plan to boost oil output by 450,000-500,000 barrels per day and expected to see the first results by mid-2009.
"We started now the accelerated programme, we will start implementing it immediately. And there are steps being taken on the ground now which will raise additional production by 450,000-500,000 barrels per day," he said. "We hope to see the first results before mid-year." Iraqs output now is below pre-war levels, and exports are lower than the 2 million bpd in May last year.