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THE WALL STREET JOURNAL: OPEC Expected to Maintain Current Production Quota

January 28, 2006 11:49 a.m.
ALGIERS — OPEC will maintain its current production quota when it meets Tuesday in Vienna, Algerian Oil Minister Chakib Khelil said Saturday.
“There is a consensus with the member countries to maintain the current quota as there is enough oil in the market,” Mr. Khelil said in a press conference in Algiers. He predicted that economic growth in the world will continue, keeping prices high.
“I expect a barrel at $50 at least for the second quarter of the year,” he said.
The oil minister was asked whether the Organization of Petroleum Exporting Countries would put more oil on the market if Iran reduces exports, amid its nuclear dispute with the U.S. and European Union.
“OPEC is committed to help replace any lack of supplies as it did with Nigeria's production in 2003, but this still depends on the production capacity of its members,” he responded. The production quota for the 11-nation cartel of oil-producing nations is currently 28 million barrels a day, which is near capacity.
Regarding a recent price upsurge, Mr. Khelil said the situation is not due to a lack of supply. He ascribed high prices partly to market fundamentals, but the mostly to geopolitical uncertainties.
The situation is different than previous oil crunches, Mr. Khelil said. Price upsurges result from unexpected growing demand caused by economic growth in the United States and China, as well as to shortages in refining capacity, he said.
Speaking in Vienna, Nigerian oil minister Edmund Daukoru said Saturday that he expects four foreign hostages being held by kidnappers to be released within a week. The four oil workers — a Briton, an American, a Bulgarian and a Honduran — were kidnapped at a Shell oil platform in the oil-rich delta on Jan. 11. Militants who say they are holding the men are demanding the release of two tribal leaders and for Shell to pay local communities $1.5 billion in compensation for oil pollution.
Mr. Daukoru added that he doesn't see a need for OPEC to cut crude oil production if prices remain above $67 a barrel.

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