World oil prices were little changed on Friday as upward pressure from doubts that Opec will lift output was balanced by sentiment that the US had backed away from an imminent attack on Iraq.
International benchmark Brent crude oil for November delivery was four cents firmer at $27,85 a barrel, while US crude was flat at $28,85.
A majority in the Organisation of the Petroleum Exporting Countries want to maintain stiff output curbs at a meeting next week, despite calls from importing countries grouped in the International Energy Agency for more supply to avoid price spikes.
Top officials at Opec member Venezuela said they viewed the current oil market as ”oversupplied”, and would push to keep output quotas unchanged at next week’s meeting.
”We are going to the Opec meeting with the position of maintaining our production levels,” Minister of Energy and Mines Rafael Ramirez told reporters in Caracas.
Saudi Arabia, the cartel’s biggest hitter, last month appeared to be holding out for an increase in quotas but more recently it has been less willing to show its hand ahead of a policy meeting in Osaka, Japan, on September 19.
A meeting of technical experts this week at Opec, which controls two-thirds of world exports, concluded that there was no room for extra Opec oil this winter.
”I think the Saudis are facing a very tough sell to push through an increase,” said Nauman Barakat, trader at Fimat Banque.
Barakat said the Saudi authorities would be painfully aware that its decision to force a quota hike in Jakarta in 1997 started an oil price slide that ended at $10 a barrel in 1998, causing economic crisis in the 11-member group.
Counterbalancing the bullish effect of Opec’s apparent reluctance to increase supply was US President George Bush’s message to the UN that Washington was prepared to use diplomacy before resorting to military action against Iraq.
In a speech to the United Nations on Thursday, Bush said he would work with the United Nations on a new resolution forcing Iraq to disarm before taking any direct action to overthrow the government of Saddam Hussein.
Prices hit their highest levels in a year earlier this week on fears that a war in Iraq could spread to other key exporters in the Gulf, which pumps about a quarter of world oil supply.
Bush’s less hawkish tone allayed some of those fears but he warned the UN General Assembly that ”action will be unavoidable” against Iraq unless the United Nations took a hard line forcing Baghdad to disarm.
Sanctions-bound Iraq was the world’s eighth largest oil exporter last year, but shipments have declined sharply this year because of a dispute with the UN about pricing. – Reuters