Iraq Says OPEC to Raise Quotas to Curb Output

The Organization of Petroleum Exporting Countries is expected to raise its production quota in June to help return bloated prices to the cartel’s $18-a-barrel target level, Iraq’s oil minister said Monday.

The Middle East Economic Survey quoted Issam Abdul-Rahim Chalabi as saying an increase in the output ceiling should end overproduction by some of the organization’s 13 members.

Chalabi said the increase is expected to be formalized at a June meeting of OPEC ministers and take effect in the second half of the year. A new output level has not been determined, the minister said. However, industry observers expect an increase of about 1.5 million barrels a day.

Prices Nearly Double

Last November, OPEC set a production quota of 18.5 million barrels a day in an effort to raise world oil prices, which had fallen to $10 to $12 a barrel. At the time, the cartel was producing more than 22 million barrels, far more than the market could absorb.

Since then, oil prices have nearly doubled, although several OPEC members are producing above their quotas, putting the cartel above its self-imposed limit. OPEC does not want to see prices too high, lest they encourage non-OPEC producers to increase production.

Kuwait and the United Arab Emirates have both demanded higher quotas, and the U.A.E. has consistently been overproducing since November, oil sources have reported.

Chalabi warned, however, that there could be no going back on the principle of equal quotas for Iraq and Iran, which fought an eight-year war ending in a cease-fire last August. He said Iraq will not even discuss the matter.